With its biggest single day decline in eight years, the Euro lost 3 full cents today and closed at $1.50 as a growing number of investors recognized that the economic slowdown in Europe would keep interest rates stable in the medium term. This plunge further confirms my forecast for a brutal week for the Euro. Oil and Gold were also down sharply as crude ended at $115 and bullion to $864. All three have had an inverse relationship to equities and the U.S. dollar. The Euro and Gold are just 2% above their 280-day moving average and key support levels, while Oil has already broken below it. If the current trend towards the U.S. dollar continues, these key financial indicators may have a long way to fall.
Astrologically, I think we've already seen most of the decline for now, so even if the Euro, Oil and Gold are heading lower, it probably won't be more than 3-5% over the next two or three weeks. After that, I am expecting a rally to recovers perhaps half to two-thirds of previous highs. That would take us back up to 1.53-1.55 for the Euro, the 900-940 range for Gold and $120-125 for Oil.
But the next leg down will likely be larger than this one. If the Euro loses 8-10% here (1.60 to 1.44-1.48), then the November/December decline will be at least double that, say 15-20%. That would take the Euro down to 1.25 by the start of the new year. Oil and Gold will likely follow suit with losses of similar magnitude.
