US equity markets took an absolute beating for 2% today dragging the carry trades back down towards early March lows. NZD/JPY was down more than 3.00% today, AUD/JPY is 2.5% lighter, and AUD/JPY is 2.00% light at the New York close. USD/JPY is also lower today, approximately 1.25%, but we must not lose sight of the fact that USD/JPY's technical structure on the longer-term charts is till very much intact. In fact, borderline healthy.

On the weekly chart, we have a simple trendline test at .618 retracement about 250 points below us. It's true two big figures leaves a lot of short trading yet to do, but we should not confuse the carry trade liquidation dragging global equity markets lower with Dollar weakness. Once the carry trade liquidation plays out, we might still be left with a healthy dollar.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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