Tuesday, May 24, 2011

Does Breach of the 1.40 EUR / USD Level Signal More Weakness?

Ralph Shell submits:

Perhaps the same analyst who erroneously concluded the Japanese natural disasters in March were bullish on the yen are touting a strong USD. The ravages of nature, floods, rain and tornadoes continue to destroy wide swaths of the South and Midwest, leaving abundant rebuilding projects. Obviously such is not the case. The USD strength is more a measure of weakness elsewhere, especially vs. the euro.

The results of the Spanish elections this weekend was a resounding defeat for the incumbent Socialist party which failed to win any important races. The weak economy has resulted in a budget deficit and consequent austerity measures. Unemployment nationally at 21.3% has hit the younger workers hardest, and they en mass demonstrated in the streets for change.

The larger problem for the euro is that the newly elected politicians, as all newly elected politicians do, complain about the mess left by their predecessors. Look for

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