The Euro and Japanese Yen are now at 20 year lows against the U.S. Dollar, which is showing up as both an energy and currency crisis for the Euro zone and Japan. The Fed could trigger a 0.75% interest rate rise at their next meeting and leave rates close to 3% before the Northern Hemisphere winter.

Chart 1

Chart 2

The Euro (EUR) for the first time in nearly 20 years (Oct 2002) has fallen beneath the U.S. dollar (Chart 1), this has attributed by two main aspects.  1.  The USD is now more attractive as per its interest rate differential to the EUR.  2.  Germany is about to enter a severe energy crisis, leading into their winter.   As they try to ween off Russian gas in lieu of the sanctions of Russia's invasion of Ukraine.  Also to note, that post-Covid supply chain issues still prevalent throughout the world, as countries within the European Union could overreach in stockpiling materials, energy and everything else before the end if 2022, making a stagflation crisis vastly worst.   The same chart shows the Japanese YEN (baseline chart), that is basically now a currency that is being dumped en masse (alongside the EUR).  Once sought after as a safe haven, despite its ambiguity even in that sense, is now showing up to be a currency crisis for Japan.  Could Europe also head into a currency crisis?   

As Central Banks have shown a reluctance in increasing interest rates to offset inflation, it has been the U.S. Federal Reserve who has lead the charge, albeit a little quicker on the draw, at 2.50%.  With the European Central Bank at 0.50%.  Why would you hold Euro's?   Chart 2 shows the S&P 500 which is adverse to movements of U.S bond yields, namely the 10 YR and of course the U.S. Dollar.  Bond yields and dollar's go up, the market goes down and so does speculative currencies which are traded against the USD dollar.  Such as the EUR and YEN.

Powell's 'Put' at 3960 is holding with the market pricing in over 50% possibility that the Fed will raise rates 50 basis points, taking interest rates to 3.00%.  The stocks are slightly bid and supported, unless the Fed trigger a 0.75% to being rates closer to 4%.   Before Autumn/Winter? Will they do it?   

Inflation is starting to become imbedded.