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Got an opinion on where oil is headed? Then you have an opinion on the Euro too!
Today, I couldn’t help but notice that oil is around $59.50! The bottom was put in at around $33. So we’ve almost doubled off of the lows.
Why do I mention oil? Because oil and the euro tend to travel in the same direction (over time). These also helps to influence the dollar downward.
So in light of the U.S. dollar index breaking its uptrend line and falling below its 200 SMA…and the EUR/USD coming back up above its 200 SMA for the first time in a long time…and oil hitting “new highs”…I’d say it is a higher probability if someone is a buyer of the euro vs. a short seller of it in light of all of this.
If your analysis agrees with that too, then look for buy signals in whatever time frame that you trade from. We’re likely re-entering the era of a falling dollar once again. So even if you’re a short term trader, you want to keep that in the back of your mind and trade against the dollar. The best way to do this initially is through the euro (EUR/USD) since it’s where the next biggest pool of liquidity is for investors.
This is why they call it the “anti-dollar”. There’s no currency that has a higher inverse correlation to the dollar than the euro. Therefore, if you get bearish on the dollar, you’re automatically bullish on the euro.
Sean Hyman
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