GBP
Comment: Surprising many by doing better than they could have imagined. This is what happens after a market had wasted so much time. The 1.8600 area is the 61% retracement from the December 2004 high at 1.9550 so expect some hesitation here today allowing other major currencies to catch up. Then on again to the psychological 1.9000.
Strategy: Attempt buy limit at 1.8600; stop below 1.8550. Short term target 1.8650 then 1.8775.
JPY
Comment: Sort of gapping lower again today, but not doing as well as some other Asian currencies, and reaching our next downside target at 111.50. Expect some very jittery consolidation around here this morning and maybe for the next few days. However, because bearish momentum is stronger than it has been since January 2005, the next step will probably be lower again despite the dollar already being oversold. Our medium term target is the 109.00 area.
Strategy: Sell at 112.00; stop well above 112.59. Short term target 111.50, then 110.75 and 109.00 medium term.
EUR
Comment: Consolidating in a neat little range just below Friday’s high at 1.2765. A break above 1.2775 later today should send it a lot higher again to the 61% retracement level around 1.2900. The Euro is already overbought but this will probably be ignored completely if the frenzied generalised US dollar selling that we expect kicks in.
Strategy: Buy at 1.2735; stop below 1.2550. Short term target 1.2800 and eventually 1.2930/1.3000.
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