Can the Euro correct higher to some degree?

Outlook:

The data today includes US household debt, not a market-mover but interesting as an indicator of consumer confidence (which we get outright on Friday). Wage earnings are up a mere 0.1% over the past year while inflation is up 2.9%. The consumer has two choices if he wants to maintain the same standard of living—dip into savings or take on debt. We’re betting on the debt.

We face a test today of whether the euro can correct upward to any degree. As noted above, a decent correction would take it to a 50% retracement of the panic drop from last week, or 1.1496. As of this morning and after good German GDP without that response, we doubt it. Does the dollar not have a maximum gain? Yes, probably, but we don’t know what it is. A return to 1.20 or 1.10 or 1.05 is not outrageous.

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