The notion that the dollar and the equities market are tied together seems to be moot now. When it was helping the bulls – yes, absolutely, a weak dollar meant strong equities. But how about now that the dollar is strong? Nope, doesn't make a bit of difference. It's a one-edged sword.
This change has become most clear recently. Since about Valentine's Day (marked with the green vertical line), these two fallen out of love with one another. The EUR/USD has been getting increasingly weak (meaning the US dollar is strong), represented by the black line. The equity market, however, shown in blue, has done nothing but climb. It makes one wonder what the equity market will do once the EUR gets some strength back.
