At 11:43 ET, the major currency pair in the world is being quoted at 1.4207. Yesterday, it was being quoted at 1.4140. What is weakening the American currency are the expectations of investors for another interest rate cut in the United States. Those expectations were strengthened after Tuesday’s publication of the Federal Open Market Committee minutes from its September the 18^th meeting when the Fed in an aggressive move cut the federal funds rate by 50 basis points. It was the first change of interest rates in the US since June of 2006 and the first cut since mid-2003. Breaking the 1.42 level opens the path for the historic all-time high at 1.4281.

A strong euro is becoming a problem for the Euro zone’s economy. The problem even is being discussed by politicians and certainly will be a hot topic on the G7 meeting on 20-22^nd of October. Finance ministers and chairmen of central banks will discuss the current economic situation of the world. Some politicians are already lobbying for the European Central Bank to take a stance to depreciate the euro. A weaker dollar creates problems for European exporters since their goods and services become less attractive to consumers. There are voices that accuse US officials that are keeping a weak dollar to avoid recession in the biggest economy in the world.

The EURUSD is on its way for the record high. It will be difficult though to break the 1.43 level. Macroeconomic reports from the US are not signaling problems; rather they are showing that the US economy is not doing so badly at all. In my opinion, we can see the EURUSD attacking the previous all-time high, but we should expect a correction movement afterwards, even to 1.40.

Adam Narczewski