Charts: Dollar-Yen to Drag Stocks Lower

The correlation between the dollar and the stock market is still there, Chris Zwermann from Zwermann Financial said Monday. He sees a weakening U.S. dollar-Japanese yen cross pulling stock markets lower, with the Dow falling below the 9,000 mark.

"We see in the dollar-yen and in the Dow Jones (Industrial Average) this situation that the Dow Jones was going up further and the dollar-yen was already on the way down. So now what we see here is that now the dollar-yen might pull down the stock markets," he said.

The same can be said of other correlations, such as in Germany's DAX index and euro-yen, he added.

Zwermann's sees the Dow slipping below 9,000, and expects the dollar to fall to 90 yen. He sees the dollar-yen falling to that mark this week from its current rate of 94 yen.

"All emerging market currencies have gone up quite a lot," Zwermann said.

If we break above 122.50 on the 10-year Bund future, there is a possibility we will rise to 127, he told CNBC.

"The curves are going to steepen further in the U.S.," Zwermann said when looking at the 10-year Yield note.

Contact Europe News


    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Europe Video

  • The FBI have stated that North Korea's government is responsible for the Sony attack. Neil Ashdown, deputy head of Asia analysis at IHS, weighs in, saying that it's difficult to "definitively attribute" a hacking attack to a particular group or state.

  • What were the main highlights of the EU Summit in Brussels? CNBC's Hadley Gamble gives you the lowdown.

  • Carnival Cruises earnings have beaten expectations in its fourth quarter, with lower fuel prices being a great help, says David Dingle, UK chairman of Carnival Cruises.