The lack of any meaningful U.S. economic data along with fear that the swine flu has the risk of turning into a global health crisis has caused investors to flock into the safety of the U.S. dollar. We have always said that when it comes to currencies, investors and traders always sell first and ask questions later.

Potential strategy: Buy NZD/JPY (we're long at 54.36) risking 53.60 targeting 56.26 (T1) and 56.93 (T2).

A double bottom has recently completed near 56.00 as prices retest bullish Gartley pattern completion...

Prices are currently re-testing intraday lows presenting an excellent risk/reward buying opportunity

The New Zealand dollar sold off aggressively in late U.S. trading on surprisingly dovish comments from the RBNZ. Having already cut interest rates by 525bp, the central bank is now suggesting that either more rate cuts may be needed or that they could start buying long term bonds.

Short positioning discussed as a break below key NZD/USD support near 0.56 may trigger further near-term losses

The New Zealand dollar rallied after the Reserve Bank cut interest rates by 50bp to a historic low of 3 percent because the comments from the central bank were less dovish. The RBNZ said that with the latest rate cut, current interest rates are very stimulatory and that their pace of easing will slow significantly in the coming months.

The AUD/USD and NZD/USD may have topped out in the face of previously established major resistance...

Although the Federal Reserve did not change interest rates this afternoon, the FOMC announcement led to a significant amount of volatility in the currency market. In our FOMC Instant Insight, we talked about how the dollar rallied because the Fed said that they “may” and not “will” start buying US Treasuries. The market was looking for something more radical such as inflation targeting or a bold announcement that they will immediately start buying long term Treasuries in size, which would have been dollar bearish. In the grand scheme of things, the Federal Reserve delivered nothing new today. So with that in mind, what should we expect now that the FOMC meeting is behind us?

The Reserve Bank of New Zealand has surprised the markets once again by cutting interest rates 150bp to 3.5 percent, the lowest level in 10 years. Today's rate cut matches their move in December, which at that time, was the largest ever.

It is not often that we can see the US dollar hit a 23 year high against one currency and a 13 year low against another on the very same day. However that was exactly what happened this morning when the greenback surged against the British pound and collapsed against the Japanese Yen. Volatility ripped through the foreign exchange market as central bank and other US officials comment on their economies and currencies. The milestones were not limited to the GBP/USD and USD/JPY as the NZD/USD and EUR/JPY also fell to a 6 year low intraday. However what was most impressive is the fact that none of the staggering losses were sustained.

The US dollar is selling off aggressively ahead of Friday’s non-farm payrolls report on the fear that for the second month in a row, job losses may have topped 500k. The recent moves in the currency and equity markets suggest that everyone expects a very weak labor market report. Although the consensus forecast is -520k, the whisper number is closer to -650k to -700k. Sentiment is strongly skewed in one direction which can be dangerous considering the fact that some of the leading indicators for non-farm payrolls call for a rebound.