It wasn't that long ago that I didn't ever look at the FOREX markets. These days, I'm practically obsessed with them. They are, more than anything else, the driving force behind what moves equities.
The correlation has been extraordinary lately. Back in April, it was so comically close to 1.0 that we might as well have just shuttered either the FX or equity markets………
Over a longer timespan, the correlation isn't 1.0, but one market is definitely leading the other. As it stands now, it seems that equities need to "catch up" somewhat on the downside that the Euro has painted.
The best hope the bulls have at this point is the trendline I've drawn below. We've come down so much (more than 1000 pips) that the risk of a bounce is very real. However, if this trendline is broken, the bears might as well strip naked, get drunk, and start dancing on tables.