How does 500 pips in 22 hours sound?

That’s how much EUR/JPY has fallen. Risk aversion is gripping markets after news that Dubai World is struggling to meet its debt obligations triggered solvency fears around the world.

Most U.S. traders were on holiday on Thursday so what we have seen so far could be just the beginning. We are seeing major breakdowns in many charts, with all the yen crosses tumbling.

Japanese government officials and central bankers are growing extremely concerned and there may be some sort of intervention in the day or days ahead. Japanese Finance Minister Hirohisa Fujii says he may contact the U.S. and Europe “if necessary.”

The comments are designed to scare currency traders away from speculating on a further yen rise but there are likely to be statements from other countries and the G7 before we see any real action.

Let’s take a look at the chart of EUR/JPY in the past two days.

We see a huge plunge from 133.50 to a low of 127.09. That’s nearly a 650 pip move, most of it coming after support at 131.50 broke. At the moment, we are seeing some consolidation but more volatility is certain in the day ahead. As always, the trend is your friend but with a chart like this one, you need to get a good entry position and continually protect profits. Beware of any rallies over 129.63 and 130.04 is likely a pivot point.