EUR: Attempt small longs at 1.4015

Nicole Elliott from Mizuho Corporate Bank at 01/28/10

Comment: Dropping below Fibonacci retracement support and the psychological level at 1.4000, but be careful because other currencies are not following suit (though of course the US Dollar Index is). Over the next few weeks we feel the Euro should stabilise and form a new interim low but this could be a slow, nerve-wracking process with a series of cautious downside probes. There is a chance that we will form a reversal candle (‘hammer’) today. Watch and wait patiently.

Strategy: Attempt small longs at 1.4015; stop below 1.3930. Short term target 1.4100, then 1.4180.

Comment: Yesterday’s ‘hammer’ against 50% Fibonacci retracement support suggests an interim low might have been established for the Euro (though this is not the case for some other yen crosses. Expect cautious consolidation, probably in a relatively narrow price range, where only a weekly close below 126.50 will set off the next leg lower.

Strategy: Attempt small shorts at 126.50 but only if prepared to add to 128.00; stop above 128.55. Short term target 126.00, then 125.25.

Comment: Holding up better than the Euro, with a broadly sideways move which is also the case for AUD, CAD and NZD. Expect even more of the same today.

Strategy: Possibly attempt small longs at 1.6200; stop below 1.6070. Short term target 1.6265/1.6300.

Comment: Bouncing from 50% Fibonacci retracement support and the top of a relatively thin Ichimoku ‘cloud’. Now let’s see whether recent highs and the 9-day moving average will cap. We still expect a drop to 61% retracement (88.25) either this week or early next week.

Strategy: Sell at 90.15; stop above 90.85. Short term target 89.50, eventually 88.50/88.25.