EUR: Attempt small longs at 1.4925; stop below 1.4800

Nicole Elliott from Mizuho Corporate Bank at 11/27/09

Comment: Knee-jerk reaction to buy the US dollar as well as the Yen may be wrong this time round. The whole of the Middle East may turn out to be a mess and all their currencies are pegged to the greenback. Hopefully trendline, Fibonacci and ‘cloud’ support will prop up the Euro over the coming weeks.

Strategy: Attempt small longs at 1.4925; stop below 1.4800. Short term target 1.5050, then this year’s high at 1.5145.

Comment: The move we have been waiting for all year, at long last! Breaking below the bottom of the large ‘triangle’, testing the bottom of the weekly Ichimoku ‘cloud’. The Euro is oversold so today allow for a little hesitation ahead of 124.38, late April’s low. Watch weekly and monthly closes for potential fireworks in thin markets during December. Political set-up in Japan not conducive for strong Bank of Japan management.

Strategy: Attempt shorts at 127.80, adding to 129.35; stop above 130.05. Short term target 127.00, then 125.00 and eventually more.

Comment: The lesson learnt from the financial crisis, to sell the pound and buy Yen, is back as RBS wants to raise another £25B. We think that this time things should be a different and that sterling will eventually hold its own against other European currencies. Therefore we shall be looking for an interim low to form in Cable but we are in no hurry to spot it. Watch and wait, with hopefully Fibonacci and ‘cloud’ support helping.

Strategy: Possibly attempt tiny longs at 1.6325; stop below 1.6200. First target 1.6600, then 1.6800.

Comment: At last! The massive move lower that has been building all year taking us to a low at 84.82. Some conspiracy theorists are suggesting a deliberate ploy to take advantage of US Thanksgiving and Eid Al Adha holidays for the moves in stock markets and out of ‘risky’ assets. Much too simplistic and short-sighted. These are already talking of an imminent reversal. Being Friday and the end of the month Monday, closes over the next two working days are important. A monthly close below 87.00 would be very bearish, even though the US dollar is as oversold as it was in November 2007. A weekly close above 88.00 is needed to mark an interim low.

Strategy: Sell at 85.95; stop well above 87.10. Short term target 85.00, then more to all-time low 79.75.