EUR/USD has registered a lower high at 1.3199 and is currently recovering after probing under 1.2946.
Our cycle analysis successfully signaled increased volatility within the first two weeks of December across "risk" proxies, including the equity and commodity markets.
We have also seen a re-test of the major low in 2011 at 1.2860, reaching 1.2858 thus far.
Inversely, the USD Index has extended its recovery higher to 80.85 so far (a move worth over 10% from the summer 2010 lows).
Speculative (net long) liquidity flows are strengthening once again and will continue to help resume the USD’s major bull-run from its historic oversold extremes (momentum, sentiment and liquidity).