Bye, Bye Euro
By: Dan Norcini
GoldSeek.com
Friday, 23 October 2015
So how does it fell Mr. Euro to get smacked upside the head by your supposed caretaker?
Mario Draghi must be taking lessons from the Bank of Japan because this is one of the best verbal whoopin’s I have seen put on a currency.
Mario yanked the rug out hard; so hard, that the basement is now evident.
I do not wish to get too dramatic here but the truth is that the Europeans simply do not want the Euro above 1.140 and they did their best to take it down. Traders can take away from his comments today that they will have the ECB at their back if the Euro starts getting too goofy to the upside. that will enable to sell rather comfortably up there should the Euro revisit that level. It would take some sort of huge sea change in sentiment tied to a fundamental development for the ECB to tolerate the Euro above 1.14-1.15 based on what Mr. Draghi said today.
On the technical charts, it collapsed through the 50 day moving average in the process triggering a fresh sell signal in the process. The question is will the bears be able to take it down to 1.100 or will the Fed get geared up and start their version of Dollar verbal intervention?
I have made no secret of my view that the last FOMC statement, and the previous one for that matter, were designed to SPECIFICALLY TAKE THE DOLLAR DOWN and prevent it from strengthening further.
That strengthening Dollar has proved to be a bane for US multinationals and no doubt there is plenty of grumbling that has reached the ears of the Fed. Also, generally speaking, the stronger the US Dollar is, the more selling pressure has tended to hit the commodity sector. My big question now is, will the Fed be as concerned about the level of the Dollar IF THE COMMODITY SECTOR continues to have the REFLATION EFFECT taking place like it is seeing today.
In other words, the Fed has been targeting the US Dollar because it has led to falling commodity prices, something the Fed does not want to see continuing once they fall to a level low enough where the low prices work to seriously impact those sectors of the economy that deal with the production/manufacturing/distribution of said commodities. The Fed simply does not want to see the job losses mount as a result as it works to short circuit their goal of achieving an annual inflation rate of 2%.
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