Euro still unable to break out of its trading range

The euro remained trapped in its $1.33 to $1.38 trading range this past week. September futures for the euro closed at $1.3773 on Friday, 1.26 cents above the prior Friday close of 1.3647. The weak employment report on Friday gave the euro a boost (up even above $1.38 at one point), but even that was not enough for the euro to break out of its trading range.

There are plenty of traders and speculators who would like to see the euro break $1.40, but whether there is really a net demand for the euro at these levels remains to be seen. For now, traders and specualtors are waiting patiently to see whether the Fed really will cut the fed funds target rate, which should in theory "weaken" the dollar.

Euro futures out at December 2008 were only at $1.3831 on Friday (compared to $1.3730 the previous Friday), so there isn't exactly a lot of "slam dunk" enthusiasm for betting on a $1.40 euro, so far. And that is evidence that some people are not convinced that fed rate cuts are really coming. It could also be a safe haven bid for the dollar as long as there is heightened global market volatility. So much for the theory that the dollar is "weak."

-- Jack Krupansky