We are long-term U.S. Dollar bulls. And as the euro falls versus the dollar, that’s bullish for European equities.
Euro ↓ = European Stocks ↑
If you’ve been playing that game profitably for some time now, consider selling some (European equities that is). The euro is oversold. Plus, stock markets in Europe have had a great since run in the past three months as the post-Election Day rally in the U.S. dollar weakened the euro:
- Italy, FTSE MIB: +15%
- Germany, DAX: +10%
- Spain, IBEX: +9.8%
HOW TO TRADE IT:
Our immediate-term proprietary risk range for the Euro versus the U.S. Dollar is $1.05 to $1.08. As the euro dipped to the low-end, European equities flat-lined in today’s trading. At the end of the range on the euro, that means sell some European equities.