THE EURO HITS A MAJOR SHORT-TERM MILESTONEThe slow-motion financial train wreck in Europe is finally taking its toll on the euro. The currency just staged a major downside breakout.
Most folks don't realize it, but the collective economies of Europe represent a larger economic block than the 50 U.S. states. This makes it a vital region to monitor.
Should its debt crisis get worse, it will throw Europe further into recession and cause economic disruptions all over the world.
We monitor the state of the debt crisis with the pan-European currency, the euro.
Back in August, we highlighted the euro's "compressed" state… a situation where an asset's normal day-to-day volatility gradually dries up and the highs and lows move closer together. These low-volatility periods are often the calm before a storm.
As you can see from today's chart, the euro broke to the downside, as we expected. It then spent the next few months chopping up and down with little headway made in either direction.
But just this week, the currency broke through its October low. It's now free to fall further and continue its bear market. That's bad news for Europe… and the world.
www.dailywealth.com
Posted: Thu Dec 08, 2011 10:25 am