Fed cut finally pushes the euro above $1.40

Trading of the euro had been hinting of maybe making a run for $1.40 over the past few months, but the big Fed rate cut on Tuesday finally was enough to overcome technical resistance and encourage traders and speculators to pile on, driving the December futures contract up to $1.4102 on Friday from $1.3907 a week ago, a gain of 1.95 cents.

Where the euro goes from here is up in the air since we no longer have a solid consensus on what the Fed will do with interest rates, where the overall U.S. economy is headed, or how deep-pocketed the speculators are who pushed the euro up to $1.41.

As far as where speculators think the euro may be header, euro futures out at March 2009 were only at $1.4135 on Friday, so there isn't exactly a lot of "slam dunk" enthusiasm for betting on an ongoing upwards trend, so far. And that is evidence that at least some people are not convinced that a slew of 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