The euro rings within the new 12 months by falling to the worst since 2022

The best thing you can say about the euro is that it’s so hated that sentiment can hardly get worse.

Then again, you could have said that on New Years Eve and it’s down 100 pips to start the year. As they say, it’s always darkest…before it goes completely black.

There isn’t much support on this chart and right now the US dollar is so strong. US capital markets are utterly dominating and there is a network effect that’s snowballing, drawing more and more money into US dollars. The US stock market is now around 75% of the MSCI World Index and multiples on anything US-listed are higher than almost anywhere else.

The world of free capital is looking at the performance of things like the Mag7 compared to their domestic markets and feeling jealous. That money is flowing into the US today as we start a new year and new money goes to work.

At some point, there will be a bear market in the US or underperformance of the US economy but right now the market just doesn’t see it.

Like the euro, that points to a one-sided trade and the potential for a huge reversion but until the music stops playing, you need to dance. Right now, the dollar is continuing to party like it’s 2024.