Our Euro Comments: A Nasty Head‐Fake

On Tuesday, in Currency Currents, I got into some Elliot Wave Principle in order to discuss why the US dollar correction might have been over, opening the door for sharp appreciation.

Until yesterday afternoon my forecast was right on the money. The US dollar had rallied and even touched a new intra‐day high – 88.14 on the US dollar index – a point where the buck hasn’t traded in more than two and a half years.

Then we watched the euro, which had held up rather well this week compared to the rest of the majors, surge and reverse its losses from earlier in the week. The move was sharp and relatively large. And it led the majors in what was very much a widespread rally against the buck.