Mizuho Corporate Bank

EUR
Comment: Most pundits are still calling for an imminent top to the Euro (currently estimated between 1.5100 to 1.5500) and US dollar strength for the rest of the year. We disagree and feel we have moved into the next phase of persistent and possibly chronic US dollar weakness. For today expect some nervous consolidation below yesterday’s all-time high of 1.5144 and the psychological 1.5000.
Strategy: Attempt tiny longs at 1.5100, adding to 1.5000; stop below 1.4950. Short term target 1.5150, then 1.5250 where we feel some decent consolidation is needed.

EUR/JPY
Comment: A potential ‘spike high’/’extension’ above the 61% Fibonacci retracement and other Yen crosses have clearer topping patterns this week. We continue to watch for signs of topping around 161.00 so that wave C is equal to wave A. Then a steady drop back down to 156.00 where some consolidation is likely.
Strategy: Attempt small shorts at 160.50, adding to 161.00; stop above 161.50. Short term target 159.50, then 158.00/157.70.

GBP
Comment: So disappointing as EUR/GBP hits a new all-time high at £0.7639. Cable is obviously struggling with the psychological 2.0000. A sustained break above here should send many back to the drawing board and completes a ‘triple’/’rounded bottom’.
Strategy: Buy at 1.9825, adding to 1.9700; stop below 1.9600. Short term target 1.9870, then 1.9960/2.0000, long term 2.1000.

JPY
Comment: At long last we got our drop to 106.00 (105.95 in fact). Allow for a little consolidation above here this morning, maybe all day. Then watch Friday’s closes for significant weekly and monthly breaks as the rapidly shrinking US dollar embarks on the next phase of its long term trend.
Strategy: Sell at 106.40 but be prepared to add to 107.00; stop above 108.00. Add to shorts on a sustained break below 105.95 for 105.50/105.00.