This video should send some shockwaves to the US economy. Stick through the entire video to hear the prediction of the Euro potentially surpassing $2 US.  In addition, the technician forecasts the Pound to fall.  If this turns out to be true, the Euro will easily overtake the Pound.  If oil remains traded in US dollars, it will create additional pressure on oil prises to rise even further.

Whoever becomes the President next year will have their hands full...

The Dow Jones News Wires had a very interesting piece speculating on how high the euro may appreciate by the end of the year. This portion really sticks out from the article:

"I don't usually use this word but $2.00 per euro is impossible. That would mean a 40% increase in 7 months and that's unheard of," said Ashraf Laidi, chief foreign exchange strategist at CMC Markets US.

"Oil would have to be well above $200 and some catastrophic event will have to take part in the U.S. politically or economically," said Laidi, who predicts the euro's upside limit as "more like $1.80 max."

What I found interesting was the choice of the word "impossible."  That is a word that people often regret saying.

As a meteorologist, I never use the word "impossible" in a forecast discussion due to the chaotic nature of weather. Every weather forecaster has had the unpleasant surprise of going to work the next day and finding out that their entire forecast busted. Even when weather conditions look like a 100% certainty, I use words and phrases such as "likely" or "highly probable. "  Economists have similar track records. On any given day on CNBC, you will see ten people talking about a major bear market while ten others feel just the opposite. Granted, a rise of the Euro to $2.00 would require a lot of problems to hit all at once, but anything is possible. After all, how many people thought oil would be up around 80% in just one year?  Who would have correctly forecast a global shortage of rice?

So, could the Euro hit $2.00 by the end of the year?  My crystal ball says "not likely."

This article clearly captures the difficulties Americans are having living abroad. As hard as it may be for many of us to travel overseas, the high prices as temporary since we will be heading back home. However, for those who live overseas, it's probably time to ask for a salary in Euros. I especially love this part:

Every euro now costs nearly $1.60. The two currencies were equal when the euro was born in 2001. Since then, the Iraq war, record U.S. deficits and now the credit disaster has sent it nosediving, and no one seems to know where it will stop.


When I get home at night I go onto my bank account online to see just how much those withdrawals are. That was 300 euros I got out, so that is -- yikes, it's $487.73. That's frightening.

By the way, the Euro is about ready to break $1.60 USD. Although that may not mean much to a lot of people, it has been a level of resistance that a lot of currency traders are watching. If it break that, $1.65 is the next target with $1.70 right around the corner.