|TigerSoft Analysis of Currencies -
A Rising Euro Is A Warning of Higher Interest Rates in The US.
We watch the EURO because it is a reflection of confidence, or the lack of it,
in the US dollar. When the EURO is rising, the dollar is under pressure and it usually
takes higher interest rates to bring money in from overseas to finance the US's
massive deficits. And rising interest rates are difficult for the US stocks.
The EURO's massive accumulation below 120 made it clear that foreign ETFs
would benefit from the growing feeling that the dollar is in a long-term bear market.
Of course, when the US responds and raises interest rates, that may temporarily
stop the slide in the dollar, but at a price. The US stock markets usually show weakness
following rate hikes.