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What Is The Meaning Behind The Dollar Reaching Record Lows Against The Euro

This week we saw the USD reach record lows against the EUR, and there are many factors which contributed to this decline. Although the EUR is a new currency on the scene and doesn’t have the history or the breadth of more established currencies, its backbone is supported by one of the world’s largest industrial areas and it continues to grow in strength and importance. The US dollar is still more important on the world stage with certain raw materials such as oil and gold, been bought and sold using the USD. This may make you question the dollar’s weakness, and as we have previously discussed it happens to do a lot with monetary policy, particularly with respect to interest rates but also with corporate financial reporting. Getting back to the USD hitting new lows, it can be confusing on how to play this scenario on the FOREX market as it seems we only ever see greater weakness in the dollar and no upside potential. In the long run you may see this as the dollar just being too weak based on the overall financial market with the shakeout in the housing market thanks to easy loans and financing to risky borrowers. There is another perspective to this, in that the EUR may be overvalued, as this same housing situation in hot real estate markets such as Spain and other European countries has yet to play out. We are not specifically suggesting this is the case, but are offering a perspective for you to consider when it comes to your long term currency positions. Depending on your perspective, the US market leads the world on both the way down and then on the way up financially, which begs the questions When have we hit the bottom?. We don’t know for sure, and won’t know until well into a recovery. In this sense there should be upside potential for the USD in the future, but the difficult part is determining when the USD has hit its low in relation to other currencies and whether the EUR has hit a high. This reasoning is designed for you to consider several apporoaches in determining your FOREX positions, which should hopefully make you fully consider your currecny trading posotions and whther you’ll be ready to profit on a reverse in fortunes this currency pair.