EUR/JPY: Attempt shorts at 134.00; stop above 135.85

Nicole Elliott from Mizuho Corporate Bank at 11/05/09

Comment: Rallying more quickly and more strongly that we had though possible as the Euro bounces from Fibonacci and channel support. We continue to see the latest decline as corrective but are not sure where and how long it will take to form a new interim base. This process could take a couple of weeks so probably no need to rush in too quickly.

Strategy: Possibly attempt small longs at 1.4820 but only if prepared to add to 1.4700; stop below 1.4620. Short term target 1.4900/1.4930.

Comment: Thrashing around in the middle of this year’s broad range. With momentum bearish, the Euro not oversold against the Yen, and a small ‘spike high’ last night should sent this pair back down to 132.00, and eventually more.

Strategy: Attempt shorts at 134.00; stop above 135.85. Short term target 132.00, then 131.00, eventually another big slide lower still.

Comment: Cable is still trapped below important resistance around 1.6665 and further cautious downside probes cannot be ruled out. Nevertheless we continue to favour the building of a new interim low this month where short term watch support around 1.6200; medium term the 1.5900 area is key.

Strategy: Attempt small longs at 1.6465; stop well below 1.6200. First target 1.6600/1.6665.

Comment: Still hovering slightly unstably between the 26 and 9--day moving averages with a small ‘spike high’ overnight. This has turned momentum bearish and the US dollar is still not oversold. Time to drop below 90.00 and set up for another cautious downside test of key support.

Strategy: Attempt shorts at 90.35/90.60; stop above 91.35. Short term target 89.85, then 89.25.