The EURUSD, which has just taken on water, and moved to fresh multimonth lows, has just dropped 200 pips in under 6 hours. The pair is now threatening to drop below 1.31 after which John Taylor's target of 1.26 becomes reachable within days. It is unclear what caused the latest weakness in the pair, besides the usual understanding that Europe is in trouble, to put it mildly. More troublesome is that just like the BOJ discovered recently, the half life of interventions and bailouts is now measured in hours. And despite this implicit strenghtening in the USD, gold continues to trade close to overnight highs.
Update: 1.31 just taken out: will this level prove to be support or new resistance? Next question- what happens to the pair after not one but two POMOs.