In Friday trade, Eur/Usd is still trapped between 1.4920 resistance, and the 1.4810 support area. Technically the euro is trading on a top of a recent bull market channel, sitting around the significant 61.8% Fibonacci resistance area, where a five wave move up in wave C), from the 1.4625 low may be finished.
In this case a larger wave II flat pattern should also be completed, which singles for a near-term technical bear market in the single currency.
The driver of the pair, at this time of a global business cycle move from trough to growth, is the S&P futures market. If stocks falter, for whatever reason, and 1050 on the S&P fails to offer support, the euro will easily follow along.
At that time, the 1.4810 support zone needs to be taken out for a near term bear market confirmation in the currency that dominates the weighting of the dollar index. The move away from S&P/Eur correlation will come when growth numbers turn to expansion and the quantative easing faucet is turned off by the developed market’s central bankers.
At that time the interest rate differential will come into play, as the race to increase rates to combat inflation will be on. The dollar may then take back the whip from those currencies that have dominated it recently, as the dollar liquidity is removed from the commercial market system.
Dollar valuations will rely less on forward debt at that time, and far more on what other regions are raising at a slower rate than the Fed.