If you haven't realized yet, I pretty much spend all day watching FX. What I'm realizing today is the relative outperformance of the Euro. It's down 75 bps but considering the DAX was down 7% at one point, this move is relatively small. In fact, the Euro has simply retraced its move from Monday. Compare the 5-day charts of the Euro, DXY index (USD), DAX index, and SPY.
Euro:
DXY index:
DAX index:
SPY:
So what does this relative outperformance indicate? First, USD is considered less of a safe haven. Second, the Euro breaking out of its range is just around the corner. And third, this sell off in SPX is consolidation and we're in the early stages of forming a sustainable bottom.
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