The euro has dropped below 1.07 against the dollar, the lowest in 12 years. Saxo Bank’s Head of FX Strategy John Hardy says currencies and equities are having a hard time keeping up with the pace of the dollar’s strength against other major currencies and especially the euro.

He is cautious about trading EURUSD in the current market, but thinks that USDJPY offers interesting opportunities.

The big question of course is if the dollar will peak or continue to accelerate. John Hardy says that the US Fed may respond to the pace of the dollar’s appreciation, when the FOMC meets next week to discuss interest rates.