Lots of head scratching yesterday over why EUR/JPY decoupled from the stock market. The fall-back answer is the macro factor of deleveraging. If memory serves, today is also the day in which the Lehman credit default swaps physically settle with net cashflows of some $8 bln expected to flow through the market (or already flowed…).
Stepping back a bit, I’d tend to blame the old axiom that the “trend is your friend”. After a two-week consolidation between 1.6250 and 1.3800, prices have broken to the downside. Based on the most recent consolidation, a slide to the 1.2700 region.
