Mizuho Corporate Bank

EUR
Comment: Yet another new record high at 1.4666 and at-the-money implied volatility looks set to move a lot higher. The Euro is somewhat overbought but zero resistance levels and all too many who are late to the party might cause dramatic and massive moves. Note this is caused by generalised US dollar weakness rather than an especially attractive Euro. Best performer over the last five days has been the Canadian dollar which has gained 5% and 25% over 12 months.

Strategy: Possibly attempt tiny longs on a dip to 1.4605 but be prepared to add to 1.4500; stop below 1.4370. Target 1.4750, maybe 1.4950.

EUR/JPY
Comment: Re-testing trendline resistance and still no clear signs of topping. For this morning allow for one more cautious upside probe, then hopefully trading lower to close towards the lower end of the day’s range. At-the-money implied volatility looks set to trade a lot higher.

Strategy: Attempt shorts at 166.85/167.25; stop above 167.85. Cover ahead of 165.00 but re-sell on a sustained break below 164.85 for 164.00 then 163.00.

GBP
Comment: Setting another multi-year high at 2.0955. Later this month/year-end we continue to allow for a squeeze up to 2.1100, instability likely to increase at 2.1000 where sharper intra-day moves are likely. Remember Thanksgiving this month marks the beginning of the holiday season so thin markets might mean overreaction and big price moves.

Strategy: Possibly attempt longs on a dip to 2.0900, adding to 2.0850; stop below 2.0735. Short term target 2.1000/2.1100 medium term.

JPY
Comment: Looking slightly top-heavy as we consolidate just under the Ichimoku ‘cloud’ and below the 9-day average. A daily close below 113.75 should probably add to downside momentum and increase at-the-money implied volatility. Open interest is still almost half what it was at this summer’s record. For this week we favour a series of cautious downside tests.

Strategy: Sell on a bounce to 114.00, adding to 114.60; stop above 115.10. Short term target 113.80 maybe 113.25