Risk sentiment turns very sour indeed

The bulled-up analysts got it wrong, initially at least, after yesterday’s election result and the Yen crosses have taken a hit after the ECB downgraded EU growth forecasts.

I’m still looking to start covering some of my AUD/USD shorts anywhere near 1.0370 but I remain very bearish on USD/JPY and I think we can see levels near 78.50 before things settle down.

We will take our lead today from Asian equity markets and with the S&P down by close to 3% at one stage, it’s likely that local markets follow to some degree.

EUR/JPY will be the lead pair in the FX market and after breaking below 102.15, it needs to reclaim that level in order to give the bulls some comfort.

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