It is interesting that the EUR/USD is circling unchanged this morning while spot gold price continue to climb in reaction to the ongoing impasse in the U.S. debt ceiling debate. You would think that if the desperate elements within the EC political structure managed to find common ground to deal with (quarantine) Greece during a crisis, that U.S. politicians would be able to put aside some of their differences to end this game of brinkmanship to avert an unprecedented crisis.

Once the markets decide that the dangerous political game is becoming THE crisis in and of itself, the laws of unintended consequences kick in, leaving the U.S. economy and the well-being of its citizens vulnerable to, of all things, Moody's and S&P ratings.

How can we find ourselves hostage to the same ratings agencies that completely fell asleep at the switch before and during the 2008 financial crisis or which were (are) beholden to their own "special" interests? No wonder gold continues to tick up every day. Can a plunge in the dollar be far behind -- against the euro in particular, which represents a currency that exhibits the political will to survive and to self-correct its shortcomings?

If EUR/USD hurdles and sustains above key resistance between 1.4460-1.4580, the euro should take off towards 1.50000 -- bullish for the CurrencyShares Euro Trust ETF (FXE).

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.