Euro/US dollar pair and SP500
The recent bounce of the Euro led directly to a sharp drop of the dollar index.
This was, perhaps, in part due to the ECB country bailout measures, in part due
to the talk of new Quantitative Easing measures (money printing) by US Federal reserve
due to commence soon. There was much talk, but so far no action, which leaves the
trap door open for a possible disappointment in mid-August, since the Euro
got very overbought. The 60-day regression analysis for Euro/US dollar pair
from UBC is shown below.
This was bullish for equities. A quick note here that the convergence target
for SP500 with inverse USD index moved much higher, to about SP500=900.
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