NEW YORK ( TheStreet) -- Quantitative easing across the globe has conditioned investors to play along with central banks in order to reap maximum benefit. The issue now is going back to an environment where fundamentals drive markets, not monetary policy.This article highlights movements of global markets this past week through an observation of currency markets. The first chart is of Guggenheim CurrencyShares Euro Currency Trust ( FXE) over DB USD Index Bullish ( UUP). It looks at the relative strength of the euro over the U.S. dollar. The spark that set off the global mess in financial markets occurred on May 22, when Federal Reserve Chairman Ben Bernanke spoke of a possible end to easy monetary policy near term. That brought uncertainty into markets and made every piece of U.S. data that much more important.
As uncertainty arose around the dollar, investors fled into the euro. The euro finally had more stability than the dollar. Although the U.S. economic picture is stronger than in Europe, the uncertainty of what the Fed will do next has kept dollar bulls on the sidelines. As U.S. monetary policy remains up in the air and the European outlook continues to improve, albeit slowly, the European currency should remain in favor versus the dollar.