The EURUSD cross rate has been bouncing around its weekly key pivot point for several weeks now. See figure 1, a weekly chart of the EURUSD.

Figure 1. EURUSD/ weekly

Key pivot points are identified with the large black dots over the price bars. These are areas of support and resistance. The most recent pivot comes in at 1.35447; a weekly close over this level suggests that Euro will gain strength against the Dollar or the Dollar weakens against the Euro. This has yet to happen although the Euro has been probing higher.

Why is this chart important? Weakness in the Dollar continues to imply higher prices for risk assets, such as equities and commodities. The Dollar remains negatively correlated to equities. I believe it is that simple. Recent Dollar weakness has been highly correlated with equity strength. See figure 2 a daily chart comparing the Power Shares DB US Dollar Bull (symbol:UUP) (blue line) to the S&P Depository Receipts (symbol: SPY) (black line). The red vertical lines identify peaks and troughs in the UUP and these coincide nicely (and inversely) with swings in the SPY.

Figure 2. UUP v. SPY/ daily