The Eurozone has fared slightly better than the US in terms of currency strength. The Euro currently trades $1.4715/EUR still off from its all time highs of 1.6040 in the summer of 2008. The ECB maintains its interest rates at a steady 1% since May 7 2009 (fxstreet.com). This has caused exports to increase and help boost the Eurozone economy. The leaders are the usual suspects of BMW, Deutsche Telecom, Nokia and Mercedes Benz (WSJ.com).

The boost in exports has helped taper off unemployment in the Eurozone slightly maintaining at approximately 9.6% just up .1% from the previous month of August. Also along with the increase in exports, Import Price Index in Germany is up to 1.3% for the month of September versus only being up 0.7% the previous month. It shows that slight inflation could be possible (forexfactory.com). However German CPI states otherwise being down 0.4% down 0.2% from the previous month, so both are conflicting reports that basically offset each other (WSJ.com). One indicates that prices have increased for imported goods purchased domestically versus the overall gauge of inflation in CPI.

With these numbers one has to look at what could possibly be in store for the Eurozone in the next year. November 5^th will be the ECB minimum bid rate decision (forexfactory.com), given the current economic numbers one has to assume that Trichet will keep the interest rate steady at approximately 1%.

I believe the Euro will still appreciate versus the dollar as long the ECB maintains a higher interest rate for the Euro versus the Dollar. I forecasted that it will hit 1.50 earlier and it did hit that level around 10/22-10/26/09 (fxstreet.com). It has the potential to test that level again within the next few months depending on the ECB and their upcoming rate decisions and commodity prices as well.

References:

1. "Currencies." Wall Street Journal. 1 Nov 2009. Wall Street Journal, Web. 1 Nov 2009. <http://online.wsj.com/public/page/news-currency-currencies-trading.html>.

2. "World Interest Rates Table." www.fxstreet.com. 01 Nov 2009. FXStreet, Web. 1 Nov 2009. <http://www.fxstreet.com/fundamental/interest-rates-table/>.

3. Wilkinson, Andrew. "Euro breaches $1.50 – what next?." www.FXStreet.com. 21 Oct 2009. FXStreet, Web. 1 Nov 2009. <http://www.fxstreet.com/fundamental/analysis-reports/ib-fx-view/2009-10-21.html>.

4. "Calendar @ Forexfactory." www.forexfactory.com. 01 Nov 2009. Forex Factory, Web. 1 Nov 2009. <http://www.forexfactory.com/calendar.php>.