Mizuho Corporate Bank

EUR
Comment: A large ‘bearish engulfing’ candle yesterday saw the Euro sell-off much faster than we had imagined and hints at another week or two of consolidation under the all-time high at 1.4349. Dips to 1.4200 and 1.4100 (and probably no lower than 1.3900) are seen as medium term buying opportunities for an eventual rally to higher highs.

Strategy: Attempt small longs at 1.4200, adding to 1.4145; stop below 1.4000. Target 1.4275, eventually 1.4550.

EUR/JPY
Comment: Yesterday’s very strong bounce from retracement support gives us a taste of the massive swings we shall have to allow for over the coming weeks. It also hints that prices will try and hold above 160.47 for another day or two. Rallies to 165.00 are still seen as medium term selling opportunities. Short term target 161.00, medium term 154.00.

Strategy: Attempt small shorts at 162.70 but be prepared to add to 164.50; stop above 166.00. Cover ahead of 160.50 but re-sell on a sustained break below 160.35 for 159.00 then 156.00.

GBP
Comment: Slapped down hard as we struggle again and again with the 2.0500 area. We are likely to hold below here this week but note that as and when renewed US dollar weakness emerges Cable is likely to outperform the Euro.

Strategy: Attempt longs at 2.0350; stop below 2.0245. Short term target 2.0450 but be ready to re-buy on a sustained break above 2.0550 for the July high at 2.0656.

JPY
Comment: Yesterday’s ‘hammer’ candle suggests prices will consolidate above the low 113.25 for another week or more. Rallies to 116.00 are still seen as long term selling opportunities for a medium term drop to 110.00 and 105.00 long term.

Strategy: Sell at 114.60, adding to 115.75; stop above 116.50. Short term target 113.70 maybe 113.25.