A Look at the Euro & the Dollar

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I have been receiving some requests to take a look at the Euro in relation to the dollar. So tonight we will turn our attention to this comparison.

The dollar printed a yearly cycle low in October. The ensuing intermediate cycle peaked on week 2. You will notice that the initial decline following the week 2 peak did not result in the final weekly cycle decline.

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Below is the weekly Euro along with some observations:
The week 2 peak on the dollar coincides with the 17 week intermediate low on the Euro.
The 28 week intermediate low on the dollar coincides with the week 26 peak on the Euro
The week 4 peak coincides with the 30 week intermediate low on the Euro.

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The Euro appears to be rallying out of an intermediate low as the dollar’s weekly cycle is declining. As we saw in November through December that this may not be the dollar’s final intermediate decline. In fact we need to keep an open mind to the different possibilities until the dollar breaks out of the weekly triangle consolidation. And if the dollar bounces off the lower triangle stem then that will pressure the Euro.

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Currently the dollar has formed a daily swing low while the Euro has formed a daily swing high. The dollar lost both the 200 MA and the 50 MA during this daily cycle decline. Regaining these moving averages would be consistent with leaving behind a three year low. Rejection by these moving averages signals that the final three year decline is still in front of us.

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The dollar has averaged printing a three year low every 35.5 months for over thirty years. May was month 36 for the dollar’s three year cycle and the Euro was rejected be the declining multi year trend line in May. Two of the previous three times the Euro was rejected by the multi year declining trend line saw the dollar print a three year low. And the Euro just got rejected again in May by the declining multi year trend line.

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