Euro slips against the dollar

The euro dipped briefly below key technical support at $1.1965 today, increasing chances the U.S. Federal Reserve could raise interest rates into mid 2006 are said to have weighed heavily on traders.

The euro initially slipped against the dollar to a fresh one-month low, trading at $1.1963, down around 0.5 percent from Friday, before finally recovering to 1.1972.

Before 9/11 the dollar was trading roughly at parity with the Euro and has declined by 20 % since. This current strength is counter intuitive as the US trade gap widens every month as the costs for their oil / natural gas purchases soar, without any immediate or future prospects of declining.

Of course as US industry and commerce disembowel the US employment market and outsource for cheap labour they make great returns and associated profits (see Chevron, Valero etc.,)so investment in the US makes sense to the markets and keeps the dollar high.