Anyone who has followed the Forex market in the past few weeks has noticed that the us dollar has plummeted versus the Euro. In fact, the Euro has recently broken records high, and the dollar is crashing against all major currencies in the world. This is due to the financial crisis which the US is facing and which leaves a great deal of uncertainty over the markets.
What will happen between the Euro and the American Dollar?
In the past week I’ve heard many people say that the worst has passed, and that the dollar will now strengthen gradually. I believe this is false and that these people will lose a lot of money. As far as I can tell, the economic indicators support the continuing strengthening of the euro versus the dollar:
- The European economy has been least affected by the current crisis in the US financial sector
- The European interest is much higher than the American, and while the Fed will likely continue to lower interest rates in the near future, the European central bank shows no signs of following suit.
- We have likely not seen the last repercussion of the financial crisis in America
All of these things say one thing: The euro will become stronger Vs. the US dollar, and not the other way around. I would hold a position on the Euro. It will likely continue to make profit in months to come.