Five Forces Driving the Euro Down

August 14, 2008

In the two weeks that I have been away, there have been dramatic moves in the currency market. Not only did the US dollar carve out a bottom, but the greenback’s recovery has been impressive. In less 1 month, the EUR/USD has plunged 1000 pips, which is a drop of more than 6 percent. The psychologically level of 1.50 was easily broken and now, the currency pair is eyeing 1.45.

The Euro continues to get killed with the currency falling to a fresh 5 month low against the US dollar today. Although the primary catalyst has been dollar strength, growing problems in the Eurozone has intensified the selling pressure. Good news is coming out of the US more often than in the past while bad news continues to pour out of the Eurozone. Therefore it is no surprise that the strong Euro is finally catching up to the region’s economy. The Eurozone could not have remained immune to the US slowdown for much longer.

Complete Story »