EUR/JPY gapped to the topside in Asia after days of risk aversion selling. Now that the GSEs are under US government conservatorship, risk appetites have been whetted. Asian accounts are particularly long of Fannie and Freddie paper, so the US bailout should up risk profiles across that region. It should also be a macro plus for the dollar in the medium-term as mortgage rates are likely to fall in the weeks ahead as GSE spreads over Treasuries shrink.
Technicians will look for EUR/JPY to fill the gap that exists on the charts from the 155.00 area down to the 153.00 region. A less dramatic gap exists on the EUR/USD chart from 1.4235 to about 1.4300.
