The euro is sliding and international markets are taking notice.
Of course, this is coming as the U.S. dollar rallies. And all this means pain for the emerging markets and its trading ETF (iShares MSCI Emerging Markets ETF (NYSE:EEM)).
In today’s chart 2-pack, we compare the euro to the EEM over the past two decades (on a “monthly” basis).
As you can see, the euro has been in a declining channel for the past 13 years. And the channel started with an ominous double top pattern at (1). That double top also triggered a huge decline (-65%) in the EEM ETF.
Fast forward to this year, and the euro has double topped once again at (2). This has sent the emerging markets lower and has EEM testing critical price support.
If the euro weakness pushes EEM any lower, it could lead to another major decline. Stay tuned.