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Despite the rally in equities over the past week, the Euro remains noticeably weak. The FXE, ETF for the Euro, as well as the important Japanese Yen and U.S. Dollar/Euro crosses all tell the same story–The Euro is consolidating near the lows of a chart in a downtrend. The weakness is continuing this morning, and while only price pays out money for stocks in the stock market, a weak Euro has been a fairly reliable proxy for global risk aversion for quite some time now. We are in the midst of holiday trading, where correlations can become temporarily untangled. However, after New Year’s it will be interesting to see if equity bulls can sustain an uptrend without the help of a Euro that turns around.
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