S&P 500 Bear Trap Signals Risk-On Rally Boosting USD Pairs

The S&P 500's rapid reversal back into its trading channel has confirmed a bear trap formation, potentially triggering risk-on sentiment that could impact forex markets. The technical pattern emerged as shorts were forced to cover positions, creating accelerated bullish momentum in equity markets. This risk-on environment typically weakens safe-haven currencies like JPY and CHF while supporting risk-sensitive pairs. USD/JPY could extend gains above 150.00 if equity strength persists, while AUD/USD and NZD/USD may benefit from improved risk appetite. The psychological impact of trapped bears rushing to cover positions often creates self-reinforcing momentum, as fear of missing out drives additional buying. Traders should monitor correlation between S&P 500 futures and major forex pairs, particularly during Asian and European sessions. Key resistance levels to watch include 150.50 on USD/JPY and 0.6600 on AUD/USD if risk-on sentiment continues.