There are some important developments occurring in the currency market. We are about to see a change from a weak USD to a strong one. Not yet, but we are close. The justification is going to be:
1. Stimulus measures in Japan which will weaken its currency
2. Stimulus measures in the EU, which will refinance Greek/Spanish debts, but also expect some broader-based stimulus.
A turnaround in the USD will of course reduce the appeal of the Dow, as competitiveness will shrink, but not considerably if the later countries are dolling out most of the stimulus. The target value is 1.45 USD for the EUR.
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Andrew Sheldon www.sheldonthinks.com
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