The EUR-JPY cross has been a leading indicator of the risk appetite in the markets for months now.... As investors & speculators warm up to Risk, Euro has been rising smoothly and swiftly against the yen.... and as the risk appetite moves out, risk aversion sets it the cross declines equally in a smooth fashion....
Lets look at the two charts.... At the end of first week in June and Aug, as the correction in EUR-JPY has set in, the stock markets have followed the cross lower....and example of S&P500 to demonstration purposes....
So where do we go from here... how deep is going to be the correction now....How long is the correlation going to be valid.... These are all million dollar questions....and the cross deserves huge attention as this juncture.... as a break of previous intermediate lows around 126-128....would trigger a reversal of the big move the markets have experienced since the march lows...
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