Mizuho Corporate Bank

EUR
Comment: Dipping to a new recent low at 1.4556, just below retracement support, working in an unstable downward-sloping ‘wedge’ formation. One-month at-the-money implied volatility is on its way up again and the Euro is very oversold. We continue to watch warily for signs of basing this week, the deeper we drop initially the sharper the reversal later on.
Strategy: Possibly attempt tiny longs at 1.4570; stop below 1.4525. Short term target 1.4700, then 1.4800.

EUR/JPY
Comment: Dropping like a stone towards March’s low. The Euro is very oversold and bearish momentum very strong. Yen crosses should push each other lower and lower, like dominoes. One-month at-the-money implied volatility should move higher, probably sharply so on a break below 154.00. For this morning expect cautious consolidation above 157.00 with rallies to 160.00 seen as selling opportunities for further big declines this month.
Strategy: Sell at 157.50, adding to 159.00; stop above 160.25. Short term target 157.00, then 156.00.

GBP
Comment: Tumbling in the biggest monthly collapse since 1992 and the UK government helps it trade lower. Cable is more oversold than it has been since 1992 and on the Bank of England’s Trade Weighted basis weaker than it has been since November 1996. This is obviously unsustainable but with the complete lack of support from the authorities who only knows where this chaos will end up. Stand aside if possible and don’t believe everything you hear.
Strategy: Possibly attempt the tiniest of longs at 1.7890; stop below 1.7800. Short term target 1.8000, then 1.8200.

JPY
Comment: Hovering on retracement support and yesterday’s close at 108.07 is probably just enough to complete a small ‘head-and-shoulders’ top. Over the coming week we expect a drop to 106.50 with Yen crosses moving steadily lower too.
Strategy: Sell at 108.00, adding to 108.55; stop well above 108.75. Short term target 107.25, then 106.50.