Euro Ends Week Strong, Confirms New Uptrend
The Euro confirmed last week’s breakout with a closing price above the important $1.32 level which improves the probability that this latest move higher is a sustainable one that is capable of taking it back to $1.35 over the next few weeks. In my mind, looking over a number of crosses, the Euro breakout is secular in nature, not just versus the U.S. Dollar. Here are a number of other signs supporting this thesis.
First, Gold has been trading inversely to the Euro since the U.S. Presidential election, which is when the Euro resumed its journey higher after getting over-extended in September on the QE III announcement. Since Brent Crude is no longer priced in Dollars but rather in Gold — between $14 and 17.5 barrels per ounce — the Euro is rising versus that as well.
Second, the Euro has broken much higher versus the Singapore Dollar, a currency it was especially weak versus all year long — actually all decade long if one looks at the chart. The EURSGD pair has moved back above $1.61 as the MAS is refusing to let the USDSGD move back below $1.22 With Singapore struggling with 2 quarters of sagging manufacturing data and weak GDP growth the MAS cannot afford to have the Sing Dollar move too much higher right now.
Lastly, the Euro needs only to put in a weekly close above A$1.28 versus the Australian Dollar to confirm a general, secular breakout versus base commodities, using the EURAUD as a proxy for that trade. The EURCAD chart broke out to higher ground after the QEIII announcement back in September.
The Euro is now in the position to begin asserting itself as the antipode to the U.S. Dollar in a strange alliance with the BRICS.