Mizuho Corporate Bank

EUR
Comment: Spiking up to yet another new record high at 1.5465 Friday with several other currencies doing something similar. Expect consolidation below here today and maybe all week. Medium term dips to 1.5000/1.4900 are seen as medium term buying opportunities for persistent US dollar weakness this year. The risk may be that you cannot even give the stuff away.
Strategy: Attempt small longs on a dip to 1.5350, adding to 1.5300; stop below 1.5140. Short term target 1.5450, maybe 1.5550.

EUR/JPY
Comment: Last week’s ‘doji’ candle following on from the previous one’s ‘spike high’ suggests a downside test this week. Then watch for a weekly close below the bottom of the inverted ‘flag’ (155.75) for a very serious downside test later on this month. Note that the cross is not oversold and that implied volatility should remain very high. Bearish pressure should build imminently and moves might be enormous.
Strategy: Sell at 156.80, adding to 158.50; stop above 159.50. Short term target 156.00/155.50, then an awful lot lower.

GBP
Comment: The strongest weekly close since early December and there is still plenty of catching up to be done. The break above 2.0000 should force many to re-think, noting that open interest is still a fraction of last year’s peak.
Strategy: Buy at 2.0160/2.0100; stop below 1.9900. Add to longs on a sustained break above 2.0225 for 2.0500/2.0600.

JPY
Comment: Dropping to a low at 101.40 Friday, the lowest price since December 1999’s low at 101.25 and in turn the lowest price since December 1995. Worrying too that politicians are quibbling over whether deputy Muto should take over as governor of the Bank of Japan when present incumbent must leave on the 19th of this month. One could imagine a situation where nobody knows what to say or do with a US dollar which looks set to test these key low levels. Mind the gap! For today while the Yen is holding above Friday’s low, it has given up almost nothing. Same goes for most other major currencies. We favour a renewed downside test this afternoon.
Strategy: Attempt shorts on a bounce to 102.50, adding to 103.25; stop above 103.75. Add to shorts on a sustained break below 101.80 for 101.25 taking profits and standing aside if possible.