The same weak dollar that has helped oil break out from a trading range to sit near $77, and gold surge to historic highs well over $1,000, has helped contribute to renewed interest in leveraging other foreign currencies against the greenback.

The Pound and Euro have been on lengthy upward trends against the dollar but recent pullbacks had knocked the European currencies back for a while. However, both currencies have surged again in the last several days.
The Euro has been the major mover and shaker as it sits just on the verge of the $1.50 level. One Euro is currently worth $1.4881 after reaching as high as $1.4975 in the European overnight trade.
After nearly a three pip correction to end the month of September, the Euro has renewed its upward trend that began in March at around $1.25. Since October 1st, the Euro has risen from $1.45 to its current position.
The Euro appears primed for an eventual retest of the all-time high at $1.61. However, it is hard to fathom that it would continue at the torrid pace that has led to a 25 pip gain in seven months, without some sort of significant pullback.
The Pound has not been nearly as aggressive in its accent. The British currency started at around $1.37 in mid-March and started upward at the same time as the Euro. A nearly straight climb through the start of June pushed the Pound to about $1.66 before it met some resistance and was mired in range trade for several weeks.
A look at medium-to-long term charts for both the Euro and Pound show that the Euro appears more persistent in its upward trend line. The Pound dropped a sharp 14 pips in a little over two months after peaking over $1.70 on August 5th. Just this week, though, the Pound has moved from $1.57 to its current position of $1.6347.
Oddly, while the Pound and Euro moved fairly much in sync during the strong surge from mid-March; their charts suggest the potential for divergence in the near term. The Euro is likely in need of a corrective pullback, but it shows nothing been steady upward movement. The Pound, however, appears to have turned over and has been mired in a relatively modest trading range long enough that it might be geared or a reversal of direction soon.
The catalyst that seems most likely to push the dollar higher is a Fed move to increase its funds rate. Comments lately indicate that this is a virtual certainty that a tighter rate policy is pending. This definitely increases incentive to get back into the dollar.

Neil Kokemuller
10:04 AM EST
Friday, October 16, 2009

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.
Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significant risk of loss.