hey John thanks for the comments and analysis.

actually I always try to respond to others who bring up things like BMW's, America's alleged ownership of other countries, etc. nah, but its all in good fun. Being European myself I was surprised to see this forum sprinkled with perspectives that seem to be more tied to national prestige and emotion and some economic theory or view is just thrown in to justify the "hail to the dollar" stance. But then I realized that this thread is American in origin and so I suppose it would be the same on a thread originating in Germany or France (i.e. some members convinced that euro is king).

in fact, i am by no means a swing trader and have been trying to make consistently by playing the ranges on the EUR-USD pair.
Went long when it was at 1.3980, exited at 1.4040; went short then made some pips, then went long again and made some pips. So for me the primary concern are my pips in my trading account. Of course it is inevitable that on a forum members, including myself, get sometimes carried away but you must admit that I am certainly not the one who starts normative arguments or debates. I merely try to respond and I hope its all taken in good spirit (not just my posting but others' as well).

It has been an excellent fortnight so far. I hope the pair continues to display the healthy ranges it has recently so my equity can continue to grow.

My personal view is that while the EUR will retrace short-term the uptrend is very much intact and in fact recent comments by Trichet applauding the ECB's independence (i.e. negating France's stance on depreciating the Euro) and American reluctance to comment on the greenback's fall clearly signal that for the most part, most politicans on both sides of the Atlantic are not too concerned. Of course there will be some comments here and there but I think they are designed for domestic consumption in Euroland and not a hint at a shift in policy.

Of course it will be interesting to see if the French get it their way in the next summit. I think rumours are that the strong Euro will be discussed in the forthcoming summit in October. In the meantime I hope the pips keep rolling!

Regarding the Saudi news, IF Saudi Arabia does break its peg to a dollar and re-peg to a basket of currencies, then you will see Kuwait, UAE, Qatar, Oman, Bahrain follow suit. If this does happen, the dollar will definitely come under more pressure. But I've been hearing the oil rich countries talk about this for the last 10 years but in reality nothing of substance ever happened. However, if these countries somehow decide to revive a shelved plan to pursue a common currency in the near future modelled on the Euro, then we are in for a major adjustment in the value of the dollar. Interesting times ahead of us.

The Kuwaiti Dinar was adjusted from its dollar peg to a basket of currencies back in May. It certainly did not rouse much of a following. However, IMO, Saudi Arabia is considered a key ally to the US in the Middle East; and therefore, their defection would have greater consequence.

Interesting theory about a possible common currency. Of course, that would probably be a long time away from now; but it would certainly alter the value of the dollar and would give an additional fracture in regional currency groups. We could see an Asian bloc (yen, yuan, ruppee, won), euro block (pound, euro, nordics), middle east bloc and North American Bloc/South American bloc. Already, we can see other relationships breaking down. The trend of everything trading off the dollar (eyeballing a decent correlation from the third quarter of last year to the end of the second quarter this year) is starting to breakdown. The risk avoidance/acceptance fault lines may not be completely exhausted yet, though it seems to be coming undone.

Economist, I can't argue that Paris is the most visited city in the world and personally I don't care and it does not matter. What does matter is the economy of Europe can not and does not justify the EUROs artifical strength. If anything, the EURO should be at parity with the dollar.

I mentioned the term "smoke and mirrors" before to describe the situation in Europe. When you have economic policy that places a 19% tax on top of 35% income tax on top of extremely over priced merchandise, and you have not only an economy that is stretched thin to the maximum but a society that can not save as they are forced to live pay check to pay check. If that is how they keep the economy going, then they are heading for disastor.

Economist, before you go pointing your finger around, consider that I am German. My late wife was French. Our children are American. Do you think only "Amei's" hold my similar sentiment? America is the best place for oppotunity and quality of life.

Your statement in itself speaks bounds about your sentiment, as is representative of the ECB's, and will become very costly to you and your "kumpels" in the near future. Proud individuals always fell the hardest. I truely hope the ECB can continue to pump the EURO higher and higher as it gives me more downward leverage to short. The higher it goes the harder it will fall, to the ground.

Speaking of the ground, Ground form economics is the root of accurately projecting where a currency will go. As our good friend Blackday so proudly mentioned, a continental breakfast costs $40 in England. Yet in Germany things are just as bad if not worse as households are forced to live on limited means and pay high prices. Consider prices in Germany, in USD rounded to nearest dollar.

Gasoline $7.14 per gallon (US $2.47)
A bottle of Diet Coke $5.00 (round about according to DailyFX. US $1.00 or .22 by BJ's WSC)
Saturn Sky (Opel GT in Germany) $47,000 (US $18,000)
HP Pavilion PC $2,100. (US $1,200)
Milk $5.65 per gallon (US $2.99)
Under sink cabinet $328 (US $69, Kraftmaid eqv.)
Playmobil play set $229 (US $159, interestng as Playmobil is made in Germany)
LEGO toy set $90 (US $49)

I need not continue; the point is clear.

Needless to say, since you like to mention "quality," everything in Germany is made of laminate, fake wood- Furniture, kitchen cabinets, flooring, moulding. It is nearly impossible to find real wood in Germany. And to make things worse, cheap quality laminate flooring costs 15% more than real 3/4inch soild oak wood floors in America.

When I was in Germany this summer, I visited a poor soul in the hospital, in Schwerin Germany. The hospital was decaying to the point it felt unsafe. The electronic equipment inside was no doubt state of the art but the beds, the infrastructure, the grounds; all were relics of the days of Hitler. To say that this is a local incidence would be a tragedy; one only needs to visit Berlin to discover this IS Germany and much of Europe for that matter. The two WW's did a number on Europe and to this day the damage is felt. Will they ever recover? Perhaps but not with the EURO being $1.40 against the USD.

For now, let the dollar fall. A few months will give the US economy a great boost- tourism is already up, exports are projected higher. What EUROPEAN imports are there that we absolutely need that we don't already have or can't make? Cars? Planes? Printers? Steal? We have everything right here. Our trading partner, China fills in the holes. Immigrants from South America do the tasks we don't want to do, like landscaping and snow plowing. The more I think about it, the better America really is.

Oh and speaking about cars, you state, "If the price goes up, then the demand for BMW may fall, but the core high-end customer is not going to shift to a Ford Taurus or a Buick!" LOL

Yes, you're correct, the demand will fall but they won't go to a Ford Taurus- they will go to a Cadillac or Lincoln or even Chrysler. As I said, America has everything right here at home. Good old main St. USA. Home of the American Dream. The Dream that my family attained. The Dream that so many other immigrant families have attained. Did you ever hear of "The German Dream" or "The French Dream?" No. That is because the opportunity does not exsist. Don't forget, patriotism runs deep in the US and can be flared up in an instant...

I think you need to seriously look at these prices you're quoting, as many of them are incorrect. A Saturn SKY here in the US, for instance, is about $26000 to $30000. www.kbb.com

Yesterday, I paid $4.65 for milk (here in NJ).

A bottle of Coke is not $5.00 in Germany.

You're a tad off on your pricing (not to mention your ongoing currency analysis).

I think economist can be forgiven the misunderstanding considering your misrepresentation unless of course we about to witness a sixth reich?

Jingoism and dreams aside (and that includes American, German, French and wet ... ) the euro's bull run is being further fueled by dollar sentiment and until that changes $ bulls will put a spin on just about anything they can to support their view. Right now I can't see that changing ...

Exactly.....

Retired,

I think the problem with this type of analysis is the fact that I can cite a number of fundamental reasons why any currency should be higher/lower/the same or whatever by said reasoning.

Though the purchasing power argument is one that is tried and true, such reversions to the mean may provide little profit opportunity for the leveraged forex investor. As a couple of fellow posters mention above, the current market focus is a continued Euro uptrend. Whether or not this has fundamental backing is immaterial through the short-to-medium term. If you are willing to wait a year for the dollar to turn, then clearly this applies to you less. But essentially I believe that market factors will send the dollar lower before actual differences in purchasing power parity will have any noticeable effect on the Euro/$ exchange rate.

74% of retail traders are short EURUSD (long to short ratio is -2.85). Moreover, since last week, retail has been aggressively selling EURUSD (short positions are up by 11.3%). In the past, when retail was short and selling more, the EURUSD has rallied in the following days. The SSI gives us a STRONG SIGNAL TO BUY EURUSD.

Source: FXCM Dealing Desk

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Do you really think USD is going to stay devalued for that long? Keeping imbalances is against the nature and current run on the dollar is unnatural. Look at the canadians - how will their economy absorb purchasing power 30% stronger than usual? Wages, costs, prices, everything set to 1.3Can/USD and now they should deal with parity for foreseeble future?

Ivanovich, for crying out load. If you paid $4.65 for a gallon of milk then you were hijacked. Here in New York City, the price of a gallon of Milk at the Food Emporium costs $3.39. And a Saturn Sky at Saturn of Mahattan is on the lot for $21,480.

Yes, a bottle of Coke a lot. According to DailyFX, $5.00 in France. I beliebv its the same in Germany.

So if anything, you are off your mark and thus your entire contra.

This is it in a nutshell.

brocoli - I'm pretty sure that David was being rhetorical with the dollar insomuch as it's difficult to see when dollar weakness will end.

retired - 2L of Coke in the UK is £1.19 (BOGOF offers at half that)

With USD sentiment low, there may come a point where traders start to say to themselves "Tell us something we don't know ..."

If this happens and there is a retracement for EURUSD we might then get to see just how bullish traders really are on the euro.

finally got the euppy shorts in. fiber got stopped out with few pips. never thought it will come back for new high prior to stabbing 4.010 region.
anyways heading out, and hoping euppy can drift lower then 161.40 and stay below that. 159.65 still good on charts..

__________________
Patience is virtue. The sooner we learn this all, sooner we can start walking to the bank. Good Luck to all of us—
The trick is to wait the price meet ur limits, instead of one jumping in.. however scalps is a totally different scenario and is not everyone's cup of tea
Disclaimer: I'm not at all suggesting trades when by either posting the graphs, or my entries. You can view it, but in the end you have to use your own logic and approach, as there is no certainty about this uncertain market...