Mizuho Corporate Bank

EUR
Comment: Exploding to another new record high at 1.5905 and the US authorities are too busy trying to stop a run on the banks to worry about the currency. US investors too fixated on the level of stock indices to see they have been fleeced on the value of the US dollar. The Euro is of course overbought but desperate times mean dramatic values and moves. Note that it doesn’t even begin to get ‘cheap’ until the 1.5000 area.
Strategy: Do as little as possible. If you really want to possibly attempt very, very small longs at 1.5800 but only if prepared to add to 1.5700; stop below 1.5520. Short term target 1.5900/1.6000.

EUR/JPY
Comment: Breaking below the pivotal 154.00 area but note that only a weekly close below here completes a massive very long term ‘top’. We feel this will be the case this month, where a sustained break below 152.00 also completes the formation. Down, down, down we go here and in a whole range of Yen crosses which will spur each other along the way. At the moment GBP/JPY and KRW/JPY are leading the way South.
Strategy: Sell at 153.50/154.00; stop above 155.65. Short term target 152.00 and later this week and this month an awful lot lower.

GBP
Comment: The pound is being punished because of the UK’s large banking system. We look for Cable to try and stabilise above 2.0000 this weeks before rallying to 2.0500/2.0600.
Strategy: Buy at 2.0150; stop below 1.9990. Add to longs on a sustained break above 2.0400 for 2.0500/2.0600.

JPY
Comment: Plunging to a low at 95.77 as, with just two days to go, there is still no consensus on the top three jobs at the Bank of Japan. No wonder one-month at-the-money implied volatility has rocketed to 21.20%. It should hold above 13.50% for weeks. Note that in October 1998 it peaked at 34.00%. For this morning the Yen should hold above 95.77, consolidating with large erratic intra-day swings up to 99.00.
Strategy: Stand aside if possible. For those who have to: sell at 97.25, adding to 98.75; stop above 100.25. Short term target 96.00/95. 77.