EUR/JPY: Sell at 130.18 adding to 131.00; stop above 132.45

Nicole Elliott from Mizuho Corporate Bank at 01/19/10

Comment: Rather messy as the Euro loses ground (slowly) against a series of other European currencies. Futures positions are being re-built and volume has been fairly good so far this year, despite relatively narrow ranges, suggesting much speculation.

Strategy: Stand aside if possibly. If not, attempt small longs at 1.4400; stop below 1.4335. Short term target 1.4460, then 1.4550.

Comment: Consolidating under the daily Ichimoku ‘cloud’ and the moving averages with similar pictures in other yen crosses. Bearish pressure has increased but the Euro is slightly oversold. Expect a little hesitation around 130.00 today.

Strategy: Sell at 130.18 adding to 131.00; stop above 132.45. Short term target 130.00/129.60, then 127.25.

Comment: Impressive but not this month’s best performer which is the Mexican peso (+3.50%). Cable has pushed up into a large Ichimoku ‘cloud’ and moving averages have crossed to bullish. Open interest in the futures has dropped this month, suggesting short-covering. Cable is not overbought and momentum is still not clearly bullish. Plenty of further upside scope then

Strategy: Buy at 1.6425, adding to 1.6350; stop well below 1.6200. Add to longs on a sustained break above 1.6435 for 1.6555 short term, then 1.6800.

Comment: Retracing 38% of December’s rally so allow for a little hesitation around here today. Note also that the Lagging Span may also find support from the thin ‘cloud’ of 26 days ago. Futures positions are being re-built but note these are running at about one-third of the 2007 peak.

Strategy: Sell at 90.45, adding to 91.00; stop above 92.05. Short term target 90.00, then 89.50.