USD Vs EUR - What Will This Currency Pair Do in 2010? By John J. Drummond

USD Vs EUR - What Will This Currency Pair Do in 2010? By John J. Drummond

The EUR/USD is the most heavily traded currency pair in the world. It has made a significant route in 2009, beginning at 1.391700, peaking at 1.512000 and is currently trading at 1.434300. As you can see, this was the year of the USD weakness and the EUR strength.

But what is going to happen in 2010? How will the USD vs. EUR battle look then?

Naturally, no one knows for sure. You should always strive to make your decisions for yourself and not base them on the recommendations of others without considering them for their merit and logic.

That being said, I have my own prediction as to where this currency pair is going in 2010. You can choose to act on this point of view or not.

I believe that 2010 will be the year of reversal. The USD will rise and the EUR/USD price will go down.

I base this prediction on a number of factors:

1. The USD has suffered in 2009 because all eyes were on America and the financial crisis which struck it. But this is a global crisis and I have a feeling the Europe will be right there in the middle of it in 2010 much more than in 2009. This will weigh down on the Euro.

2. Ben Bernanke, head of the Federal Reserve has hinted that there may be interest rate hikes in America soon. Right now, interest rates in the US are at nearly zero. Even a slight increase will turn the dollar into a much more appealing currency, driving up its value.

3. It seems that the European Union is far from united as far as its individual members are concerned. Some countries seem to have been ready for this crisis while others have suffered tremendously because of it. Greece has already suffered a reduction in its credit ratings, and Spain is under a similar threat. Both these countries are using the Euro so it will be under even greater pressure soon.

Naturally, there are challenges America has to face like a growing deficit and more financial problems. While we're not out of the woods yet, is seems that the full brunt of the crisis has past. Recovery, slow and gradual it may be, seems to be about to begin.

Therefore, I believe that in the USD vs. Euro battle in 2010, the American dollar will triumph.

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John Drummond works from home. He writes often on business, trading, and finances.

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