As suspected, reaction to the Fannie/Freddie news was mixed with risk-aversion trades covered straight out of the gate, which weakened the dollar initially. This was followed by a fresh wave of dollar buying which saw the greenback reach new highs for the move, breaking support at 1.4190/95 in the process. Prices are consolidating in the 1.4225 region.
The gap on the charts in EUR/USD and EUR/JPY have been completely closed in the case of EUR/USD and partially closed in the case of EUR/JPY. Should early US equity strength falter, look for a complete closure in EUR/JPY.
