Mizuho Corporate Bank

EUR
Comment: We shall continue to favour correction and consolidation this week with the Euro probably holding below 1.4750. Drops to 1.4400, maybe even as low as 1.4200, are seen as medium term buying opportunities.

Strategy: Possibly attempt tiny shorts at 1.4720; stop above 1.4825. Cover shorts ahead of 1.4500 and then watch for sings of basing between 1.4500 and 1.4400.

EUR/JPY
Comment: Last week’s very large ‘bearish engulfing’ candle and weekly close below 160.00 should increase bearish momentum over the medium term. This week the cross will probably try and consolidate above 159.00, trading roughly between 159.50 and 162.00. Rallies are seen as excellent selling opportunities for a big move lower medium term. Note that other Yen crosses are currently testing key support as the ‘carry trade’ unwinds.

Strategy: Possibly attempt small shorts at 161.15 but be prepared to add to 162.50; stop above 164.15. Add to shorts below 160.00 for 159.00 short term and then 158.00.

GBP
Comment: Repeated and determined downside probing yet Cable is still clinging to the 1.9700 area. This has increased significantly the chance of a ‘false break’ lower followed by a sharp short squeeze. Treat with respect.

Strategy: Possibly attempt small longs on another dip to 1.9700; stop below 1.9600. Add to longs above 1.9900 for 2.0000 short term.

JPY
Comment: Trying to hold above 109.00 and we still favour a short squeeze towards 111.00/111.50 this week, maybe for two weeks. Rallies, probably no higher than 112.00, are seen as excellent selling opportunities for an eventual move even lower later this month.

Strategy: Possibly attempt tiny longs at 109.00; stop/reverse below 108.60 for 108.25 then 107.25. Add to longs above 110.00 to cover all longs ahead of 111.30. Then watch for signs of topping.