It is interesting to see that US equities have lost their 1:1 link with the dollar today. The buck has strengthened notably over the last 24 hours, nearly 2 cents below the 1.5048 highs at one stage (in EUR/USD terms) and eliciting no negative reaction from Wall Street. The S&P holds near 1100 despite the dollar surge. With commodities coming lower, we suspect stocks will join on the downside as the day progresses.
EUR/USD bounced off its 10-day moving average at 1.4864 on its push to the downside and trades now near its 21-day average at 1.4887. A close below these averages will likely see more long-liquidation from system traders tomorrow.
4.4840/50 will provide support near-term. The Asian low from Friday morning is at 1.4950 while the 38.2% retracement of the 1.4480/1.5061 rally comes in at 1.4840.
