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.

Prices are closing in on an exceptional amount of bullish Fib pattern convergence....

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

The rapidly declining CHF/JPY may be approaching short to medium-term support as prices approach bullish pattern completion near daily bull trendline support.

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

A quick dip to 79.5-78.5 may be the spark needed to ignite a 3-month bull trend continuation...

This week's rally of near 1,000 pips saw only a brief mid-week 38.2% correction (point C on 2hr chart below), which oftentimes signals a strongly trending market. In terms of geometric pattern recognition, this also suggests higher probability for an ABCD extension pattern to emerge.

Potential selling opportunity should prices rally over the next 12-24hrs

An intraday selling opportunity as EUR/JPY hits critical intraday resistance near 130.50 with risk to 131.16

The USD/JPY may have found a temporary bottom...

There is a lot of talk this morning that the Bank of Japan is checking currency rates. The Japanese Yen has continued to rise over the past 24 hours and by checking rates, the central bank is keeping a very close eye on where the Yen is trading. Given that it is 11pm in Japan right now on a Friday, the central bank is either very serious about intervening in the currency market or they want to keep currency traders on their toes. The 87.00 level for USD/JPY could very well be their breaking point. The risk of intervention is limiting the decline in USD/JPY on a day when the sharp drop in Dow futures (-220) should be driving it much lower

There has been a lot of volatility in the foreign exchange market this morning, driving currencies to historic levels:

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.