Back in mid December I was interviewed by Futures magazine for their January issue. When I was asked my thoughts on the rapidly falling US Dollar, I responded that it was in no ones interest to see the US Dollar crumble…. at least not too fast. Especially as it had recently seen a huge depreciation that needed to be digested like a large holiday meal.

Predictions Past and Present

When asked about the Euro  - I predicted accurately that the prices would stabilize in a range between 1.45 and 1.50 for the time being. That was mid December and the article was published January 1st. We are still in that trading range as of this post Feb 25.

Well it appears to me as that this prediction has played itself out and time will tell if the Euro is now ready to break out of this 500 pip range.

Euro Stuck in a Range- For How Much Longer? 

Mu

Correlation Between Euro and Pound vs Dollar - Is it Over?

Or Will the Euro Drop and Pound Rise?

The interesting thing is that the Euro and the Pound have traditionally traded in a decent correlation versus the US Dollar. However, while the Euro has stabilized at lofty levels, the Pound spent the end of 2007 giving up it’s gains and stabilized at a lower level of it’s own 500 pip range between 1.94 - 1.99

So the question is will the correlation come back together? If it does - we could expect the Euro to drop to the lower end of it’s range around 1.43 as the Pound could appreciate to around 2.035 - where they could meet in the middle and correlate again.

Or - the other possibility is that the ECB and Trichet could raise rates and leave the Dollar and the Pound behind. But I find that to be unlikely.

US GDP Report this Thursday - I will be broadcasting a special Live Coverage Webinar Free here on FX Street beginning at 7:30am Eastern time.

To read my thoughts published in Futures magazine and to register for the free Webinar visit the Investors Education Network home page.