One More Go, At least

With the EUR bouncing off the 3 year trend line, it is too early to make any decision one way or the other on reflation trades. What is strange is that the Canadian is still falling while Aussie and Kiwi dollars recover. The Dollar Index has predictably shied away from its February high short of the 200 day moving average. Meanwhile, energies started the week up after bouncing off their 50 day. Crude (CL), HO, HU, NG all higher today. HU could certainly get back into the 160’s.

EUR could get back to 133 and change. There are going to be a number of challenges for the US, not the least of which is what is going on at GM. This will likely be a trigger for dollar weakness. Note that currencies are winding up again for a breakout later this year one way or the other. Market price oscillates around a moving equilibrium value. When the oscillation is making higher highs and higher lows or lower lows and lower highs it is in a trend. When, as here, it is winding up, a relatively stable equilibrium will then move to a new higher or lower equilibrium at some point.

EUR
EUR

Also interesting is the JPY. It has actually broken the trendline extending back to early ’02. It looks like it will now come back to that line, which should act as support.

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