The Euro vs Dollar-Is the Fed Loosing This War?

One of the Fed's objectives with QE2 is to destroy the value of the dollar, which is a tax on all American Citizens. However, Europe has it's own problem without even manipulating their currency yet.

Above on this 4 hour chart you can see the Euro has dropped below support, there should be a small battle for support as there usually is, but the trend has a lot of momentum behind it and it's not based on gimmicks, it's based on real problems. I warned, this was the trendline to watch, the area of serious support for the Euro.


In the short term, like I said, there may be a battle around the support/resistance area and the short term outlook seems to confirm this.

 Above is the Euro trust ETF FXE and there's a 1 min positive divergence suggesting a move up coming, which means a move down in the dollar.

UUP on a 5 min chart is showing nice confirmation of the trend. On a 1 min chart (not shown) there is a negative divergence, but it is in the context of this larger confirmation and falls right at the red arrow. So be prepared for a little choppiness. News coming out of Ireland is pretty fast and pretty important stuff including the possibility of a EU backed bailout as soon as today, even though Ireland hasn't formally requested it yet. So this is a dynamic market, but the outcome of this could be very telling with regard to the outcome for stocks and the market in general.