Mizuho Corporate Bank

EUR
Comment: Allow for a bout of consolidation this week. Note that already the Euro is no longer overbought and at-the-money implied volatility should ease somewhat.

Strategy: Possibly attempt tiny longs on a dip to 1.4555; stop below 1.4475. Target 1.4700/1.4750.

EUR/JPY
Comment: The lowest close in many days but a very large Ichimoku ‘cloud’ has provided support, for now at least. Expect consolidation inside here today and maybe until the end of this week. All rallies are seen as good selling opportunities for a move lower (probably an awful lot lower) later this month and through to year-end. Allow for massive intra-day price swings where increasingly thin markets will exacerbate the problem of a Yen which is gaining against just about every single currency that one can trade.

Strategy: Sell at 161.20, adding to 162.40; stop above 164.00. Add to shorts on a sustained break below 160.00 for 158.70 short term and an awful lot lower further out.

GBP
Comment: The first corrective move lower has been much faster than we had imagined. Prices today should hold above 2.0500, and maybe hold above here all week. We have moved into a period of correction and consolidation which is likely to take another week or two so trading strategies should reflect this.

Strategy: Attempt small longs at 2.0655, adding to 2.0525; stop well below 2.0500. Cover longs between 2.0850 and 2.0900 and watch for signs of stalling before re-selling.

JPY
Comment: Just holding above last year’s low at 108.97. Classic Yen price action where rallies are halting and slow while drops are so often brutally swift. Takes no prisoners. Expect consolidation above 109.00 this morning and maybe all day. Rallies are unlikely to break above 112.00. These are seen as medium term selling opportunities for a break below 109.00 and possibly a rush down to 105.50.

Strategy: Strategy remains unchanged: sell on a bounce to 110.50, adding to 111.15; stop well above 112.00. Short term target 109.00.