Mizuho Corporate Bank

EUR
Comment: All very exciting as we set another new record high at 1.4349 but note that Eastern European currencies are doing even better, the Czech koruna at its strongest ever against the Euro. Futures positions still need re-building and the Euro is surprisingly not overbought. Dips towards 1.4200 are seen as medium term buying opportunities for an eventual rally to higher highs.

Strategy: Attempt small longs at 1.4320, adding to 1.4245; stop below 1.4130. Target 1.4400 then 1.4550.

EUR/JPY
Comment: Last week’s large ‘bearish engulfing’ candle adds weight to our view that we are forming a significant long term top. Rallies to 165.00 are seen as medium term selling opportunities. Short term target unchanged at 162.00, then 154.00.

Strategy: Sell at 163.50, adding to 164.50; stop above 166.50. Cover ahead of 162.50 but re-sell on a sustained break below 162.00 for 160.50 and eventually 154.00.

GBP
Comment: Strongest daily and weekly close in ages and above the top of the trendline. It is still struggling to hold consistently above 2.0500, but will hopefully do so when renewed US dollar weakness sets in later this week.

Strategy: Strategy remains unchanged: attempt longs at 2.0450 but be prepared to add to 2.0350; stop below 2.0245. Add to longs on a sustained break above 2.0515 for the July high at 2.0656.

JPY
Comment: Gapping below the bottom of the ‘triangle’ formation and there is a chance that we will try and fill the ‘gap’ early this week. More interestingly last week’s massive ‘bearish engulfing’ candle suggests we will hold below 118.00 for many months. Rallies to 116.00 are seen as long term selling opportunities for a medium term drop to 110.00 and 105.00 long term.

Strategy: Sell on a bounce to 114.50, adding to 115.75; stop above 116.15. Short term target 113.50/113.25.