Mizuho Corporate Bank

EUR
Comment: Clear-out time as the little ‘head-and-shoulders’ pushes prices below trendline support. The Euro is oversold and this year’s high at 1.4968 will stay as a top for at least another month, maybe three. We feel that any drop towards 1.4100, which could be very sudden in thin markets, is an excellent medium term buying opportunity for further US dollar weakness later next year.

Strategy: Attempt longs at 1.4430; stop below 1.4350. Target 1.4600 short term.

EUR/JPY
Comment: Quite extraordinary how this currency pair is clinging to the top of the Ichimoku ‘cloud’. We continue, rather impatiently, to wait and watch for signs of topping.

Strategy: Sell at 163.00; stop above 164.50. Short term target 162.00, then 161.00, eventually 159.50.

GBP
Comment: Dipping below the previous week’s low and probably clearing out some very stale longs. Momentum is very bearish so allow for a small downside probe this week towards the psychological 2.0000 level at which point many may start panicking and many media headlines. We see this as a good buying opportunity.

Strategy: Attempt small longs at 2.0180; stop below 2.0125. Short term target 2.0400, then 2.0600.

JPY
Comment: Last week’s short squeeze has extended beyond what we had expected and can probably be blamed on thin market conditions. This problem will get worse this week. We continue to urge extreme caution.

Strategy: Sell at 113.00/113.50; stop above 113.85. Add to shorts below 112.45 for 110.50