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May 14, 2018 | All Eyes Are on the Euro

Rick Ackerman

Rick Ackerman is the editor of Rick’s Picks, an online service geared to traders of stocks, options, index futures and commodities. His detailed trading strategies have appeared since the early 1990s in Black Box Forecasts, a newsletter he founded that originally was geared to professional option traders. Barron’s once labeled him an “intrepid trader” in a headline that alluded to his key role in solving a notorious pill-tampering case. He received a $200,000 reward when a conviction resulted, and the story was retold on TV’s FBI: The Untold Story. His professional background includes 12 years as a market maker in the pits of the Pacific Coast Exchange, three as an investigator with renowned San Francisco private eye Hal Lipset, seven as a reporter and newspaper editor, three as a columnist for the Sunday San Francisco Examiner, and two decades as a contributor to publications ranging from Barron’s to The Antiquarian Bookman to Fleet Street Letter and Utne Reader.

The Euro/USD looks to have made a temporary low and should bounce a bit here. We don’t normally discuss currency pairs and the Forex market at Rick’s Picks but it’s important to understand what’s happening globally to understand what will happen domestically. With the constant bashing of the Fed compared to what’s going on in Europe the U.S. Fed looks like the Rock of Gibraltar. When you buy a U.S. Bond you are buying a bond representing all 50 states. Can you imagine buying a California Treasury Bond or a Florida Treasury Bond all with different yields? That’s exactly how the Euro was set up, with each European member having its own bond instead of a unified bond market like we have here in the U.S.

This is the Euro’s fatal flaw and this is why the German Bund is trading at 200 basis points lower than the equivalent U.S. treasury, because German Bund investors think they are going to get Deutsche Marks when the Euro finally collapses.

Once the Euro/USD bounce to the trendline resistance concludes (could take a few months to play out) it’s easy to see it dropping into the abyss below the critical 1.16 area and all hell breaking loose in Europe. Not only is this going to fuel the flight to U.S. equities but also catapult the U.S. dollar much higher. How high could the dollar go? The 1985 highs are not outside the realm of possibilities.

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May 14th, 2018

Posted In: Rick's Picks

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