USDJPY rebounded late in the London session on rumors that the BOJ was supporting the market just above 106.00, and accelerated higher mid-morning in the U.S. session to clear 107.00 on surprise ECB talk of fear of an economic settlement. We'll watch to see if USDJPY can hold above the old November lows at approximately 107.25, as the immediate trend on the daily chart is still lower. This pair will continue to have to deal with the belief that it's BOJ policy to accept a stronger Yen long-term, but to sell into it from time to time to keep speculators at bay.

EURJPY posted a new 4-month low settlement today after slicing through the160.00 level yesterday. With the ECB shifting gears overnight and going from concern about inflation, which hinted at higher rates, to concern about an economic slow down, which points to lower rates, this pair was very unsettled and saw a 150 pip sell-off over a 2-hour period mid-morning CST. Both the short and intermediate-term trends are lower on the daily chart, which points to a test of 155.00 over the next several sessions. The Euro itself saw a 2-full point sell-off following ECB governor Mersch's warnings.

The Australian Dollar saw a sharp turnaround today in sympathy with the Euro after finding resistance on Tuesday right at the 50% retracement level of the Nov/Dec correction. GBP continued to languish at 9-month lows as shorts continue to see no reason to cover their positions.

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