We saw a flurry of dollar selling this morning following a poor housing number, and additional concerns that the credit crunch will effect US earnings. The stock market was sold on this news and USD/JPY accompanied equities on a rapid slide lower. But interestingly, the other non-dollar carry trades did not accompany USD/JPY and equities lower, which is what we are accustomed to seeing. Further, EUR/USD broke from 1.3590 and has not looked back as we currently trade 1.3667. It is possible that the decoupling of the carry trade and equity market relationship has become a reality, and traders will start reacting to market news via the dollar, rather than through the yen.

Technically speaking, the dollar has been sold into various support levels against most major currencies this morning. The prudent technical trader must stand aside from the emotional news story du jour and trade the market as the price patterns require. And the price patterns indicate the dollar is in fact at support and could be setting itself up for a bounce. We are watching USD/JPY above 115.00 for a move back towards 116.00.

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

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The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.