The Euro made some substantial gains in the second half of last week, especially against the US Dollar. Monday was another story altogether; it felt like a war was brewing in the market. The Euro broke above the 1.1450-60 resistance level in the first hour of the Asian session and later on during the European session it broke the 1.15 level. This started the turmoil and when the US traders entered the market in the afternoon things just worsened. EUR/USD went up as high as 1.1715 from 1.1540s in a matter of minutes, but the biggest move happened in USD/JPY, which fell nearly 600 pips that day. That is the biggest fall in this pair since 2008.

While the US Dollar suffered heavy losses against the Euro and the Yen, the Australian and New Zealand Dollars suffered against the USD. The tie to the Chinese economy made these two currencies very vulnerable, with the NZD declining about 550 pips in less than an hour. Although the volatility is still considered high, now things have calmed down. EUR/USD broke back below 1.14 yesterday and USD/JPY went above 120 from an 116.12 low. We feel that the Euro and Yen are heavily overbought against the USD in the daily charts, and that´s why we decided to open two long-term forex signals on these pairs, sell EUR/USD and buy USD/JPY. NZD/USD has come a long way from 0.5990s and right now it´s below the 50 MA, so we decided to open a short-term sell signal in this pair today as well.