Morning Update

Who let De-Boom off!!
A complete Market Meltdown after a loose lipped Dijsselbloem claimed Cyrpus was a template for Eurozone Bank Restructuring! This caused a 150 pip drop in the EUR/USD and closer to 300 in EUR/JPY! Then a few hours later he retracted his statement which caused a 10 pip pop in EUR/USD! So the Damage was already done! After the Cyprus deal went through early on Monday morning we saw a rally to 1.3050, combined with the DAX over 8000 and the S&P 500 in the high 1560's, It looked risk on. But from the open of the European markets we saw a steady decline in Risk Assets and a lot of Japanese Yen strength as investors sought Safe-haven flows. Financial and Bank stocks took a hammering with some Italian Banks having to halt trading for periods during the day!
The Dax was down over 200 points from its highs at one stage yesterday after Mr Dijsselboems comments, but recovered some losses after he retracted his comments. USD/JPY sold off from 95 to lows of 93.57 on risk off sentiment, Tripping some huge stops just below the 94 handle, But recovered to close above 94.
The S&P 500 took a nose dive from close to all time highs to reach session lows of 1545, but recovered and closed above 1550.
Yesterday's volatile day just proved how much of a disaster the Eurozone is and that the crisis is far from being resolved. All of the can kicking has resulted in a complete mess and at this rate it looks highly likely that some countries may be forced out of the Eurozone or their good be a realistic break up of the single currency. From a trading perspective a sell the bounce strategy has to be adopted because this nonsense looks like carrying on for a significant length of time with some analysts calling fair value of the EUR/USD at 1.15. That's a 1400 pip drop from the level we trade at now.
The American economy looks very resilient and the S&P 500 looks extremely well supported by Quantitative easing and an abundance of a good economic data. However they cannot avoid the chaos in the Eurozone as the global Financial system is all interlinked and we fear a deeper correction in the American bourses may be inevitable with this ongoing chaos.
Some levels to sell EUR/USD at today are 1.2881, which is the 200 day moving average and if it gets higher the 1.29 handle would be a great sell entry point.
If we see more Yen strength today a firm break of 94.00 in the USD/JPY pair could lead to a deeper correction towards 90 as the pair is extemely overbought and looks set for a correction.
Good luck in the markets!
Lowkey