USD/JPY and EUR/JPY are both under pressure as the markets react to the very soft housing data and Bernanke’s dovish testimony before Congress.

EUR/JPY is back below the 122.00 level helping tember the EUR/USD rally after the data.

EUR/USD seems content to have rung up more stops and now trades down at 1.3555.

2-year note yields are trading around 0.85% and German 2s are down to record lows of 0.89%, below the ECB’s 1% overnight refi rate. The textbooks tell us that inverted yield curves signal an impending recession…