FYI | Sep 22 2010
By Rudi Filapek-Vandyck
Currencies have been at the forefront of market movements throughout the past two years (if not longer) and technical market analysts at Barclays Capital observe it would seem the market is again preparing for, and pushing towards, another period of significant USD weakness.
Given the inverse relationship between the USD and risk assets since early 2008, this could be a positive signal for risk assets worldwide.
The analysts report EUR/USD is essentially still trading within a range, but the fact that recent pressure on the greenback has now pushed the cross above its 200 day moving average leads to expectations of further strength ahead, say the analysts.
They point out history suggests the 200 M/A is a reliable indicator for support and trends. Certainly, the longer the cross manages to stay above the trendline, the stronger support for further advances will become, suggest the analysts.
And that, I think, is where the September story for EUR/USD and US equities fall in line with each other.