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USD/JPY is crashing in a “safe haven” reaction to the Italian elections. It is already 300 pips from the Sunday gap high of over 94.70. The pair now trades at 91.40 after already falling below 91.USDJPY Crashing on Italian elections deadlock February 25 2013

A complex political picture is emerging from the Italian elections, in which a hung parliament could lead to another round of elections in the euro-zone’s third largest economy. Updates coming.

The chart speaks for itself…

The day began with the news about the probably appointment of Kuroda as the head of the BOJ. The dovish candidate triggered hopes of further yen devaluation and resulted in a weekend gap that neared 94.70.

The pair then stabilized lower as liquidity came in. The Italian elections already killed the pair. At first, it seemed that the pro-EU politicians Bersani and Monti won, but as more results emerged, a picture of a hung parliament emerged. The Italian upper house is practically ungovernable.

USD/JPY is now above support at 91.20, which is a weak support line. It was only temporarily breached so far. The more important support line is at 90. Resistance is at 92.12, followed by 92.95. Markets are somewhat erratic at the moment.

For more lines and events, see the USDJPY forecast.

Update:  EUR/JPY returns one month and 600 pips on the Italian political mess

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