WSJ: Dollar and the Euro to Go Toe-to-Toe -by Riva Froymovich

For the complete report from the WSJ.com click on this link

Dollar and the Euro to Go Toe-to-Toe -by Riva Froymovich

The euro and dollar are set for another volatile week, because there isn't much to differentiate the currencies' prospects. The euro typically trades against the dollar on risk appetite, rising or falling in tandem with stocks and interest-rate differentials. However, this pattern has become unstable as both the euro-zone and U.S. economic outlooks stray from clarity. As a gauge for risk, the movements of the two currencies have been broken. This week, the euro is expected to continue bouncing within its recent range between $1.30 and $1.35. A breakout is unlikely given a shortened holiday week for many European traders. Despite distinct monetary-policy approaches by the Federal Reserve and European Central Bank and differing amounts of economic-stimulus measures in each region, it remains unclear which currency has it better.

Note EU-Digest: Most economists will agree that the EURO certainly is worth its value, while the US dollar with the more than one trillion US dollar Government deficit lurking in the background is basically a feeble overvalued currency which is hanging in there mainly because it is still the worlds major reserve currency. Once that changes the cards certainly do not favor the dollar.