NEW YORK ( TheStreet) -- The currency market was flat during the Asian trading hours but the major currencies were again showing a bearish bias at the European open, extending the selling seen throughout a prior few sessions.

The euro/U.S. dollar plunged to new lows overnight, breaking beneath the 1.3300 area. As of December, when the current downtrend started, the euro has lost 1800 pips, or about 14% of its value. Over the same time, the S&P 500 has gained 70 points, or just about 0.6%, even though the two have held a very high correlation over the last 12 months, something that is now getting tested.

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This divergence between the S&P and the Eur/Usd was caused by poor data coming out of the eurozone, which puts the euro under huge pressure. In Wednesday trade alone, the euro was the weakest among the most traded currencies in the foreign exchange market.

Despite Wednesday's strong moves, the outlook of the currency market hasn't really changed. The U.S. economy still looks much stronger than the eurozone, U.K. or Japan, assuring that the current episode of dollar strength will continue over the medium term. From these levels, it is very possible that the market will retrace some of the recent gains, but the dollar is expected to resume its uptrend, having as a medium-term target the 85.00 dollar index area.
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