Anyone planning to visit Europe from the United States this year will find they can afford a much better hotel than they bargained for. A euro is now worth only about $1.08, and this is probably not the end of the European currency’s downward rally – or at least it isn’t according to the waves of speculators in the foreign currency market these days.
Large investors are betting more heavily against the euro than ever before since the common currency, now used by 19 countries ranging from Ireland to Latvia, was first introduced more than 15 years ago. It’s a practice called shorting, and it’s a dangerous game to play if you get it wrong.
For investors, this is a sign of confidence that the downward trend that began last April – when it was still valued close to $1.40 – will continue over the coming months and even years.
Still, some currency experts are already warning that pessimism over the euro might be exaggerated. Could the euro’s decline already be over?