FXstreet.com (Barcelona) - USD had a nice lift today across the board during Asian session, along with US 10-year note yields taking a dive from 1.8% to 1.75% on a large demand for safety. This resulted in EUR/USD breaking below 1.32 to set a fresh 2-day low at 1.3178, still in positive territory for the week, though.

“Back to back dojis ahead of 1.3300 round figure resistance is lending a bearish bias on the currency pair,” says FXstreet.com Independent Analyst Richard Lee, who thinks “A likely decline at this point would target the 1.3128 initial support level,” adding: “Further penetration lower would place the 1.3070 figure into play,” the analyst concludes.

Credit agency Standard & Poor's downgrading Cyprus’ rating to CCC+ from B in late NY trade, didn't help the bullish case for EUR, but it wasn't either the biggest catalyst for the new round of risk aversion seen, specially in equity markets. Nor the Mayas calendar. It was news, or lack of them, coming out from Washington D.C., USA.

'Plan B', brought to Congress by U.S. House Republicans in an effort to pressure Obama for a deal on the US 'fiscal cliff', couldn’t get enough support from caucus members, and further talks on the matter will have to wait until next Thursday, Dec 27, to start off again. That was the big reason behind the risk-off move. Markets did not receive such uncertainty as good news.

As result SP futures endured a massive drop by more than 40 points, or nearly -4%, to print lows around 1391 for the March contract amid huge volume. The index bounced back in less than 1 minute to prices above the 1400 mark, settling around 1425 where it now trades. Dow Jones Industrials fell more than 300 points, holding onto a 190 points loss by now.

Maybe the Mayans made a good call after all. Gold also tanked to a fresh 4-month double low intraday around the $1635 mark, down -3% for the week. Even the Japanese Yen was on the rise, the weakest currency among majors for over the last weeks. Following the storm, EUR/USD has been stable around the 1.32 figure for last 4 hours.

“Don't Blame End of World for Higher Friday Volatility,” says CEO at BK Asset Management Kathy Lien, “it will be because of Quadruple Witching and/or position adjustments ahead of year- end,” the analyst suggests. “Four times per year, contracts for stock index futures, stock index options, stock options and single stock futures (SSF) expire at the same time,” she explains. Add to that cash settled monthly currency options expiration this same weekend, and we can have the picture completed.