Mizuho Corporate Bank

EUR
Comment: Interesting to note that as we approach the lower edge of the range since March consensus opinion is that the Euro has peaked already. In yesterday’s Monthly Reuters FX Poll all sixty analysts bar two (one of which is ourselves) though the single currency would move towards 1.4400 in 12 months’ time. This seems a rather crowded, one-sided view and being contrarian we welcome this shift. For this morning expect prices to try and base above the 1.5350 area, pushing up towards 1.5525 late this afternoon.
Strategy: Attempt longs at 1.5445; stop below 1.5275. Add to longs on a sustained break above 1.5525 for 1.5600 short term and then 1.5750.

EUR/JPY
Comment: Still working within a potential ‘broadening top’ and still subject to a possible final upside squeeze. Proceed very cautiously.
Strategy: Attempt shorts at 169.35; stop above 170.15. Short term target 168.65, then 167.00.

GBP
Comment: Being the only forecaster to predict Cable will trade significantly over 2.0000 in the coming twelve months in Reuters’ latest FX poll gives some idea of how polarised and anti the pound consensus opinion has become. It is more oversold against the dollar than it has been in a year and approaching the lower edge of the band since January. We expect this latest sell off to end ahead of 1.9400, some time this week. Watch for signs of basing today and tomorrow.
Strategy: Possibly attempt tiny longs at 1.9500; stop below 1.9400. Short term target 1.9650.

JPY
Comment: After so many weeks of dull markets yesterday’s squeeze to almost the highest level this year comes as a big surprise to many. Decent volumes too, hinting thatsome are rushing in without thinking carefully. The 110.00 level, as well as psychological and pivotal, is a 50% retracement from last year’s high. The US dollar is terribly overbought and we are probably witnessing a final ‘spike high’ which completes the corrective rally since March. Interesting that at-the-money implied volatility is dropping sharply while bullish momentum is not that strong. Watch for a reversal pattern on the weekly chart either this week or next.
Strategy: Possibly attempt tiny shorts at 109.65; stop above 110.15. Short term target 108.70, maybe 108.25.