Sword of Damocles Hangs Over the Euro

We've seen the dollar fall, as per my forecasts, and against the view held by most that rate hikes are bullish for the currency. A dollar is just a Treasury of zero maturity and everyone knows the price of a Treasury goes down when rates go up. Same with the currency. Raise rates, the "price" (exchange rate) goes down. Furthermore, rate hikes are inflationary; they're general price increases and they're also "money printing" as the government is the net payer of interest. Raise the rate and the government spends more, all else equal. I hope this puts it to bed once and for all. 

Of all the currencies out there, I think the euro probably has the most potential. The only thing holding it back at this time is political risk. The French presidential election next month will dictate the fate of the euro, at least in the short term. That's the only thing holding me back from being aggressively long the euro. ...629 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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