Volatility has ripped through the financial markets with currencies and equities staging sharp intraday reversals. All of the major currency pairs have seen an increase in one month volatilities on the fears that valuation and recovery expectations have become overextended. The U.S. dollar strengthened against all of the major currencies, driving the EUR/USD down more than 125 pips in the process. With such a strong reversal, the burning question on the minds of all currency traders is whether the latest move is merely profit taking on dollar short positions or the beginnings of a full fledged reversal.