The recent flight out of major European equity indices into rates markets warns of increased risk aversion within the eurozone. EUR/USD succumbed to the bearish price action in EUR crosses noted earlier this week and pulled away beneath its 200-day average. The charts of bund yields and the CAC 40 warn of further downside, which is likely to weigh further on the EUR. With US yields also dropping, near-term pressure on USD/JPY is building as it presses on trendline support at 93.90. Weakness in USD/JPY, however, is likely to be temporary.
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Barclays