Jim Cramer featured DeCarley Trading currency market analysis on Mad Money!
In early 2008, the euro was trading near $1.60, and the US dollar was in the gutter. Nobody, and I mean NOBODY, gave the dollar a chance at recovering against the euro (weakness in the euro). Athletes, actors, and other celebrities were demanding to be paid salaries in the euro rather than the greenback. You might recall a similar phenomenon last year when there were requests to be paid in Bitcoin!
Yet, to the surprise of some A-listers, in July of 2008, the euro started to weaken against the dollar. It quickly collapsed from a peak of $1.60 to $1.23 in three months! Since then, we have seen some volatile rallies but $1.60 is a distant memory; over the last decade, the euro has spent most of its time between $1.20 and $1.05. The current sell-off is unusual in that it has dipped below $1.03, but in the big picture, a $1.00 euro is probably as unsustainable as the $1.60 euro was. That said, with the world looking for par and the algo bots shooting for it, we could see a temporary probe lower to crush the hopes of the remaining bulls before things turn the corner. If so, that might mean 98 to 97 cents vs. the dollar. In any case, once the narrative shifts, the rally will be fierce. In 2017 the euro dipped slightly under $1.05 only to trade above $1.25 in less than a year.