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The good news is that this outrageous trend still looks intact for now. This has been a nice breakout on pairs like the EUR/USD that had been channeling for months. USD weakness seems to be driving the trend, which is fine and I am sure most of us agree that the USD is not likely to look better from a fundamental perspective for a while.

However, the problem is that the bad news can cross the point that it is merely bad for the USD into a full blown panic, which could create a fast reversal. I am sure the correction in November 07 is still very fresh in everyone's accounts. If that occurs the subsequent flight to quality would push long term yields down and the USD up. I am watching overhead resistance on the 10-year index (TNX) and nearby support on the USD/JPY, USD/CHF and S&P 500. If those levels are breached the balance may shift.

Here is what I think the bottom line is - The trend looks intact and despite my concerns over the past couple of trading periods, the market has continued to move. However, I think prudent (tight) risk control is justified. That means stops or hedges should be in place and it makes sense to keep an eye on your level of diversification. Check your account to make sure you are not too overweight in any single currency.

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