The collapse of risk that was sparked earlier in New York when FOMC Chairman Bernanke stated that the US economy faced an “unusually uncertain” future saw a calmer session today in Asia. The EUR/USD saw yesterday’s 1.3025 highs erode to lows near 1.2735 today as traders looked for shelter from Chairman Bernanke’s less than optimistic statements to the Senate Banking Committee about the state of the US economy. As could be expected in such a situation, the dollar and the yen saw aggressive buying with every word that was not positive. Equities in the US shrugged off positive earnings to end the day in the red. That drop in equities carried over to Asia where the Nikkei 225 saw its 5th consecutive day of losses.

The EUR/USD did stabilize in Asia after late NY lows of 1.2735. The pair calmly remained range bound between 1.2740 and 1.2780 for the large portion of the trade day. GBP/USD looked almost exhausted after earlier moves due to the MPC meeting minutes that sent the pair from 1.5330 to 1.5125 in a little over 12 hours. With the quantitative easing programs left untouched, the pair cruised along between 1.5190 and 1.5165 on the day. GBP/JPY followed the risk off mantra and sunk a big figure lower to 131.00 lows in Asia. EUR/JPY copied the moves, dropping a little more than a handle to 110.00. The USD/JPY moves were significant, with the pair sliding from 87.00 to lows near 86.40, ever so slightly creeping closer to the psychological 85.00.

Traders are now looking ahead to the 16:00GMT hour on Friday for the release of the much hyped European stress test results. It can be safely said that this event will be the barometer of the health of not only the banking sector, but the economy of Europe. The results should initially cause market confusion, but once deciphered should lead a path to near term Euro direction.