The market is looking a lot blurry today and the questions remain the same, is it really dollar strength, or just a new phenomenon covering the market amid escalating tension and haven demand!

Greenback was the sole survivor this morning, as Asian stocks slumped, US futures are trading red, and European markets are fluctuating amid broad scale losses in bond markets. Surely, one would only think it is just another day, yet to me, I can only say: where is the missing link?!

The dollar was trading bullishly this morning, where the dollar index hit the strongest today at 80.39, and currently off highs trading around 80 levels and slightly above the lowest recorded so far at 79.88. The market is contributing this advance to the extended tax breaks from the Obama administration, though really, if that is the case and a stronger economic outlook is the matter of debate, then how come Treasuries are heading south over fiscal imbalances, doesn't that place the dollar with the same basket as the indebted euro!

But no, the dollar held is grounds this morning, and though the odds in the market are for the tax support Obama presented, but that does not sound convincing to me either. Surely, we are not totally negating its effect, but we think greenback gained stronger support from external sources!

The pattern is different, yet the outcome is the same. Gold is off the highs and only logically after the rally to all time new records, and if you oppose dollar haven demand, then it is your call, but Japan is in Asia, and for now it is not at all safe to be targeting that region.

We can see the shifting from the pacific and diversification amid Chinese tightening fears, and the repercussions it will have also on hot money, which will include tighter regulations as well to prevent the flow of cheap western money into its markets. But, the main problem here is the Korean Peninsula; the crisis has not been resolved and news of artillery fire in the North today spooked the market further and that merely explains the dumping of the yen for the dollar!

The Japanese yen slid versus its American counterpart to trade at 84.05 today weakening from early areas of 83.44. The USDJPY pair currently is hovering around 83.82 and we expect the pair's bullishness to prevail as far as stability is above 83 areas, targeting 85.00-95 areas.

So it is not merely dollar strength, no, it is the volatility and the fear in the market which left no standing victor BUT the dollar; the yen is burdened by Korea, gold by its established record, and Europe by its debt.

Another confirmation to this scenario is Swissy's movement, which still defied the dollar strength and managed to rise. The USDCHF pair is trading bearishly now and reversing lower after setting the high of 0.9914 and currently at its lows around 0.9860.