re "it is not as if there are fundamental reasons for the Euro to be much stronger than the dollar here at these prices and right now"
Hi Zeev, it's just a theory but here it is anyway...
While I agree that fundamentally the Euro economy is as "bad" or worse than US economy, I think the European outlook is better, or at least perceived that way.
The reason is that although factors such as unemployment and generall business climate are pretty bad both sides of the Atlantic, the excesses in Europe are not as bad as in the US. By excesses I mean the amount of debt held by consumers and companies, the deficits run by govts and the (IMO) over inflated levels of stock markets and real estate.
So I think the conclusion is that the euro economies are more balanced and that low interest rates have a better chance of providing real relief, rather than the pushing on a string effect it might have in the US. As an example after the last US rate cut, the actual cost of mortgages went up in the US, but a similarly timed cut in euro rates was accompanied by a corresponding reduction in mortgage rates.
In short, europe will get some gain from its pain, US might have to wait a little longer.
