We’re watching fibonacci levels in the dollar pairs as we retrace more than 50% of today’s declines. Depending how you chart it, the 611.8% retracement in USD/JPY is around 1.06.50/60 so that’s a key zone to watch.
First off, the retail sales report obviously wasn’t that bad and the US economy is fine. But at some point the price action matters more than the news. At some point the price action is the news.
At that point, all that matters is the price action and when traders see massive gains and losses they lose their appetite for risk. None of these markets are going to snap back as far as they’ve fallen.
Eventually they will bottom out and the trends of dollar strength, euro weakness and higher Treasury yields will reassert themselves but a bottom on a drop like this is rarely V-shaped.
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