Obviously, the longer the period, the easier it would be to take. However, I have to think that there's a breaking point no matter what the time period. At a certain point, things become cheaper somewhere else. And if the EU is as dependant on it's exports then as it is now, it won't matter when this occurs.
It doesn't need to hit 1.80 anything over 1.50 would be a slow death blow and we're pretty close already, with housing bubble troubles in US we could hit that in 2007/2008. That would later lead into an exaggerated recession in Europe which has its own housing bubbles too and many structural woes like high unemployment in many sectors. As a reaction to that the euro might see a long decline and see under 1.0 levels again even 0.75 at worst. EU cannot compete with USA which cannot compete with China, take that as an order of tumbling. Whichever way things go one thing is sure: the Asian countries will emerge as relative winners.
Bank of Italy slashes dollar holdings in favour of UK pound By Ambrose Evans-Pritchard (Filed: 03/08/2006) Italy`s central bank has switched a quarter of its foreign currency reserves into sterling, dumping billions in US Treasury bonds, in the most dramatic move to date by a G7 country to slash exposure to the dollar. The Bank of Italy, now under new governor Mario Draghi, said in its half-year report that it had raised the sterling share of its reserves to 24pc, up from zero in 2004. Dollar holdings were cut from 84pc to 63pc, a shift that is certain to be analysed closely by traders as a gauge of sentiment among the 12 central banks of the eurozone system. The yen share fell from 14pc to 10pc. Sterling closed yesterday at $1.8787 against the euro, near its peak for the year. Italy`s huge purchase of pounds is the latest vote of confidence in Britain`s economic management, a sign that sterling is regaining its historic role as a benchmark of stability, even if it is too small a player to serve as the anchor of the global system. An Italian official said the Banca d`Italia was taking action in advance of a dollar slide, widely expected as the US interest rate cycle peaks this summer and investors focus once again on the US`s $800bn (£425bn) current account deficit. The official said: "There are not many places to go once you decide to get out of the dollar. Japan is always a question mark. "At least the British economy is humming along OK and UK bonds offer a decent yield [4.63pc]. At the end of the day, Britain is still the biggest single trading partner for the eurozone." The Banca d`Italia is viewed as one of the world`s most market-savvy central banks, holding onto every ounce of its gold reserves when others, including the Bank of England, under Treasury orders, sold much of their bullion at the bottom of the market. However, it co-ordinates policy closely with both the European Central Bank and its peers in the euro system, led by the German Bundesbank and the Banque de France. Tony Norfield, chief currency analyst at ABN Amro, said it was likely that other euro-zone banks were also selling dollars, although most of the rest do not reveal the exact breakdown of their foreign currency holdings. Mr Norfield said: "The Italians have been quite sneaky, but I wouldn`t be surprised if others are doing the same thing. The Bank of France is worth watching." Dollar flight has been gathering pace at smaller central banks. In Sweden the Riksbank announced in April that it had cut its dollar holdings from 37pc to 20pc, while the United Arab Emirates and the gas sheikhdom of Qatar have both signalled plans to move into euros. The Swiss National Bank switched 10pc of its holdings into pounds in 2004, and Russia is now following suit. Russia`s central bank said it had cut the dollar share of its surging reserves from around two thirds to 40pc, a weighting that matters more and more as Russia vaults up the foreign reserve league. At last count, Moscow was poised to move into third place with $251bn. However, for China and Japan, the two giants, with combined reserves of some $1,800bn, it is much harder to diversify smoothly out of the dollar. Any sign that they are liquidating their holdings of US bonds could trigger a global stampede, causing a dollar crash and a broader financial crisis. The two countries would be left with sharply devalued holdings. The fashion for sterling is a stark contrast to the grim days of the 1960s and 1970s when the UK pound was invariably the sick currency of the rich club. The silent accumulation of sterling by the heavy brigades would help explain the strength of sterling, the star performer on the currency markets this year. The International Monetary Fund said the UK pound had overtaken the yen to become the world`s third biggest reserves currency, after the dollar and the euro. Known global reserves of pounds have risen from £55bn to £111.5bn over two years.
Don't think so, mate. Trend is looking tired. But if it manages a push beyond 1.2940, then look out - 1.30 is a dead deal.
With last week's effortless 225-point tumble, to me it looks like we got at least another 100 pips to slide. Is anyone here trading EUR/USD? Current EUR/USD is 1.2673. Iconoclast