Last Friday’s close on the EURUSD cross was the highest weekly close since the middle of May.  The euro pushed up against the US Dollar closing just over $1.316 eclipsing the close of $1.3128 to end the week of August 9th.  This is a very significant occurrence given the Federal Reserve’s statement about QE this week.  Now that the Fed has authorized unsterilized money printing — in effect they are going to monetize most of the U.S. Government’s budget deficit in 2013 — the Euro will be free to rise as the E.U. moves to consolidate power behind the regional currency block.

A daily close for the Euro above $1.3175 would be your leading indicator of the next big move in the EURUSD.  Euro strength at this point is also bearish for Gold as money that was stashed in Gold on European instability is exiting back into the Euro, giving the Exchange Stabilization fund the cover it needs to massage the Gold price in the future’s market and continue to play the Kevin Bacon game at the end of Animal House — “Remain Calm!  Everything is Under Control!” — right before he gets run over by the angry mob.

Expect something similar in the U.S. Dollar over the next few months.  The Fed is going to engineer inflation whether we want it or not.  Modern mixed market theory demands it and so do the banks whose balance sheets need to be shored up.