Inside technicals and chart patterns by 
"Currencies reflect economies — but do not necessarily effect economies."
I thought this was a great quote. There has been a lot of talk as to how and why the Dow continues to climb as the U.S. Dollar Index continues it’s slide. In many ways, currencies are the "stock of a county" but they reflect interest rates far more. A higher rate lends itself to a stronger currency while lower rates weaken a currency. That’s is exactly why the Euro and Pound is so strong against the Dollar. Both these Euro and Pound are moving higher due to the fact that their respective governments/banks are expected to raise rates. The FOMC — it is widely expected — wil cut rates. No whether any of this will happen is irrelevant. It’s been baked into the cake! Remember the market doesn’t just move based on what has happened…most movement is based on a perception of what will happen.
Currently the Dow sits just below the high I marked on the chart below.
The Dow is moving higher for precisely the same reaons the U.S. Dollar moves lower. The exepectations of a rate cut and add to that the Euro and Pound are moving higher based on expected hikes from the ECB and BOE.
The 1.3600 level on the Euro/USD will be a formiddable level and the GBP/USD will now battle to stay above the 2.000 level it has traded up to. The Dollar does have about three key support levels that can be found on the weekly chart that are the most likely price points for buyers to step in.
These support levels will coordinate with the resistance levels on the EUR/USD most directly. Currently the EUR/USD has resistance at the "00" and 1.3616.
“Affect” economies? Anyways, that is an interesting post. Thanks.