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Actually, the concept of the euro was that it would be 1:1 with the dollar and then be allowed to float with other hard currencies. Therefore, the $ is still down 20% and as long as the US has major deficit spending the euro will continue to beat the dollar.

...as long as the US has major deficit spending the euro will continue to beat the dollar.

The deficit is only a part of the equation. US Economic growth is fueling demand for dollars. As long as Europe's economy is growing at anemic rates and with the uncertainty of the European Union, the US will be very attractive to investors.

I see this trend continuing.....

Therefore, the $ is still down 20% and as long as the US has major deficit spending the euro will continue to beat the dollar.

Let us examine the CIA World Fact Book, 2005 Edition. Deficits, European Countries compared to United States...

The United States is #34 on the list of largest public debt vs GDP, 65% in fact. For the EU, we have ... #33 Germany. #31 France, #22 Turkey, #9 Italy, #8 Greece.

If massive deficit spending were an issue here, why would currency traders support a country that has 105% of their GDP tied up in public debt (Italy)? Or 112%, such as Greece?

Such talk in the financial pages is just yet another excuse to bash the US, but of course, we'll see yet another quote from the G8 summit with France, Italy and Japan complaining about the big deficits that the US is racking up. Oh, and Japan is #3 on the list with a whopping 164.3% of their GDP in public debt. I'm sure the currency traders will be wiping out the value of the Yen tomorrow.

Don't hold your breath.