EUR / USD – Ride the momentum. EUR / USD will go to $1.50 as investors seek additional risk and sell lower yielding currencies in favor of higher yielding currencies. From the $1.45 point to $1.50, there is a lot of money to be made in the next month or two and there is a lot of trading history in this range from 11/08 to 3/09 and 8/09 to 9/09. $1.50 will be the key psychological barrier in the uptrend, but at this point $1.45 should provide key support levels. In general the dollar is declining against all the major currencies because the dollar is the cheapest funding currency and given how liquid it is, it is easy to trade against foreign markets. In addition, the Fed has been maintaining its commitment to a low interest policy whereby rates will not be raised until they are certain the US economy is coming out of the recession in a good shape. Bernanke is well aware of the risks of a double dip recession and doesn’t want to cut credit too soon so as to cause the US economy to contract again at the onset of it righting itself.
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