Mizuho Corporate Bank

EUR
Comment: Very precarious indeed as we cling to retracement support and a soon to widen Ichimoku ‘cloud’. The Euro is still very oversold and momentum very bearish, withsentiment against the single currency growing daily. We continue to watch warily for small signs of basing again this week.

Strategy: Attempt small longs at 1.4690; stop below 1.4600. Short term target 1.4900 and then 1.5000.

EUR/JPY
Comment: Selling off hard yesterday from the bottom of the ‘broadening top’ formation. Still hovering around 50% retracement support but looks set to break below here this week. The monthly candle is looking increasingly top-heavy with a monthly close below 160.60 adding to current strong bearish momentum. Late this month/early September we continue to expect a drop to 158.00, and further out a slide to 152.00, at which point at-the-money implied volatility could easily move up to 14.00%.

Strategy: Sell at 161.00/161.50; stop above 163.25. Short term target 160.60/160.45, then 158.00.

GBP
Comment: Dropping to a new recent low at 1.8405 and no signs of basing yet. On a Trade Weighted basis it is weaker than February 1997. The collapse is very dramatic and sudden yet a similar size to the pullback in 2005 and still within long term retracement parameters. We shall try and live through another week where we expect Cable to try and find an interim base but this is likely to be slow nerve-wracking stuff.

Strategy: Possibly attempt the tiniest longs at 1.8440; stop well below 1.8400. Short term target 1.8600, then 1.8800.

JPY
Comment: A potential ‘triple top’ or small ‘head-and-shoulders’ as we continue to consolidate above the 26-day moving average at 108.35. Expect yet more consolidation above here this morning, downside pressure increasing if we hold below 110.00.

Strategy: Sell at 109.70; stop above 110.75. Short term target 108.35/108.00, then 107.25.