Dollar Continues Steep Decline Against Euro

The dollar has fallen even further down against the euro through trade yesterday, as currency investors continue to fear the implications of a worldwide credit squeeze on the US economy.

Through trading yesterday the dollar was down as low as $1.3920 per euro, gathering momentum from yesterday’s record lows. With markets continuing to trade over volatile US economic conditions, analysts are predicting that the dollar could continue to fall over the next few weeks.

The dollar has seen seven consecutive drops across trading sessions over the last week as a result of fresh hopes that the Federal Reserve is poised to slash interest rates, which would ultimately fuel an economic recovery to a certain extent.

Additionally, the ongoing economic climate in the US as a result of the continuing housing market situation has turned investors off US investments, which has seen the value the dollar plummet in recent days.

The European Central Bank also suggested yesterday that Eurozone interest rates could rise after markets settle, leading to heavier investment in the euro as opposed to the dollar, further suppressing the dollar.

And with the European economy buoyed today off the back of strong French economic figures, many analysts are predicting the euro could soon break the landmark $1.40, which would see the dollar reach its lowest ever point against the euro, and underline the underlying weakness of the dollar and the US economy as a whole.

The sub-prime saga is continuing to weigh down the US economy and the dollar, with investment becoming increasingly hard to come by as banks look to preserve liquidity.

Analysts are predicting that until the Federal Reserve take measures to improve stability, markets will remain volatile. Ultimately, this will come at the expense of the value of dollar, as interest rates look to be cut.

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