Mizuho Corporate Bank

EUR
Comment: Retreating by a bit more than we had allowed for, neither the weakest currency overnight (New Zealand dollar) or the strongest (South Korean won). Hopefully the Ichimoku ‘cloud’ will form an interim base for what we see as an A, B, C-type pullback where C equals A.
Strategy: Attempt small longs at 1.5695; stop below 1.5600. Cover longs between 1.5950 and 1.6020.

EUR/JPY
Comment: Despite inching to a new all-time high (169.97) one-month at-the-money implied volatility has collapsed as we hover in a tiny range within a potential ‘broadening top’. Watch for a potential ‘spike high’ both on the daily and the weekly charts.
Strategy: Attempt shorts at 169.35/169.65; stop above 170.15. Short term target 169.05, then 168.20, then 167.20.

GBP
Comment: Holding amazingly neatly above 1.9900 and hard to tell whether this is caused by one very large buyer or that suddenly all and sundry want to own sterling sub-2.0000. This has caused some big moves of sterling against weaker Eastern European currencies and the Kiwi. Expect more basing attempts this morning followed by a steadier rally this afternoon. We remind that only when Cable starts holding comfortably above 2.0100 will the risk of further downside tests ease.
Strategy: Attempt small longs at 1.9950; stop below 1.9800. Short term target 2.0100/2.0150.

JPY
Comment: The strongest daily close in ages and almost the highest this year, clearly above the 200-day moving average, is making many very twitchy. The US dollar is almost overbought and bullish momentum is very poor, so we urge extreme caution. We continue to watch for signs of stalling and a wait for a reversal formation on the weekly chart. Expect an upside probe of 108.00 this morning, then drifting very slowly lower this afternoon.
Strategy: Possibly attempt small shorts at 107.85; stop above 108.75. Short term target 107.00, then 106.00.