The panicked response from the S&P 500 and surge from the dollar to the QE3 taper warnings from the FOMC minutes and Chairman Bernanke shows the market is sensitive to market-wide risk trends. Yet, it seems the masses are not so sensitive that they will self-immolate on an unconfirmed Fed least not yet. In today's video we discuss the technical and fundamental boundaries to tripping a self-generating cycle of risk aversion along with what that means for trading. With a focus on the dollar, Japanese yen and Australian dollar; we discuss the difference between probabilities and potential.

Use the DailyFX-Plus Technical Analyzer to identify possible trade setups.

Sign up for John’s email distribution list, here.