Saturday, 3 January 2015
Euro to continue to fall against the US Dollar
Click on image to enlarge.
The Downtrend of the Euro against the US Dollar that began in April 2014 continues unabated. The movement is spectacularly smooth, reminiscent of (though not quite as steep as) Downtrend B of 2008, which brought the value from a high of $1.57 right down to $1.27. Since the American Economy continues to strengthen (while Europe languishes) and the end of ZIRP in the Dollar zone (but not in the Euro Zone) is inevitable, and Long-term Support Line A is decisively breached, there seems to be nothing to stop the downtrend along Line D until $1.1, or thereabouts, is reached.
The following chart shows the historical effective FED interest rate. It is clear that Zero interest rate is an anomaly and will end very soon. It reached a high of 19% in June 1981 and sank to Zero in November 2008.