Why We Bet on the Euro to Rally This Week

Extended weakness in the dollar typically translates into gains for the common currency

Editor-in-Chief
Jul 21, 2017 at 10:53 AM
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The post-election rally in share prices also embraced the U.S. dollar, but the proverbial bell rang on Jan. 3, 2017 as the dollar put in its rally peak and promptly embarked upon an unambiguous slide that culminated on Friday, July 14 with a close (by the futures on the U.S. Dollar Index) below the key 95 level. And as shown on the accompanying chart of Guggenheim CurrencyShares Euro Trust (FXE), dollar weakness over extended periods is almost always accompanied by strength in the euro currency.

Note in particular the preponderance of purple readings above 70 on the "RMI 20" panel -- which represents FXE's 20-day Relative Momentum Index, and flashes bullish signals above the 70 mark. We expect FXE's rally to continue through July options expiration, fueled by the dollar breakdown and by a successful re-test by FXE late last week at the critical $110 level.

fxe daily 0715



Subscribers to Schaeffer's Expiration Week Countdown service received this FXE commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters -- straight from Bernie's trading desk. Learn more about why Expiration Week Countdown is one of our most popular options trading services.

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