Mizuho Corporate Bank

EUR
Comment: To put it crudely: if the US government takes over all $5 trillion of the GSE home lenders the debt-to-GDP ratio would double to 100% (and then the rating agencies would have to re-do their sums). Eventually this will sink in to investor psyche. We expect generalised US dollar weakness over the next six months, a move which may well gather very considerable momentum. This week allow for several cautious upside tests at the record high of 1.6020. A weekly close above here should set off another big round of short covering.
Strategy: Attempt small longs at 1.5885 but only if prepared to add to 1.5800; stop below 1.5690. Cover longs between 1.5970 and 1.6020, re-buying on a sustained break above 1.6035 for 1.6250.

EUR/JPY
Comment: Sneaking up to a new all-time high at 169.69 but is about the only Yen cross to do so. The Euro is very overbought so watch for signs of topping this morning.
Strategy: Attempt tiny shorts at 169.55; stop above 169.75. Short term target 168.25, then 167.25.

GBP
Comment: Lagging the strongest currencies as we continue to hover below the psychological 2.0000 level. Only a weekly close above 2.0000, which is possible this week and hopefully by the end of the month, would add some decent bullish momentum.
Strategy: Attempt longs at 1.9835, adding to 1.9750; stop below 1.9640. Short term target 2.0000/2.0050.

JPY
Comment: Sidelined still, surprisingly. Consolidating in a small ‘triangle’ around 106.50 and we favour more of the same today. Later on this week we are due a test of the Ichimoku ‘cloud’.
Strategy: Attempt shorts at 106.50, adding to 107.00; stop above 107.75. Short term target 106.00/105.80, then 105.00.