Foreign Exchange »

The most widely traded currency pair in the world is the EUR/USD. Having made a significant route in 2009, starting at 1.391700, peaking at 1.512000 and being currently traded at 1.434300 it can be said this was a year in which the EUR gained strength compared to the dollar.

But how will 2010 be like? Even though nothing is certain but it is still recommended to take ones decisions on their own instead of listening to others. But at least knowing what others think of never hurts either. A probable prediction of where the currency pair is heading to in 2010 is given below. The choice of whether to act on this prediction lies solely on the reader.

2010 possibly will be the year of reversal. The USD will rise and EUR/USD price will go down. The factors for this are as pointed out below.

1. Since all eyes were on the USA and the financial crisis that struck the USA, the USD suffered the most. But since the crisis was global in nature Europe will feel the crunch in 2010 and the EUR may go down.

2. Ben Bernanke, the head of the Federal Reserve has hinted that there could be interest rate increases in America. Presently they are almost zero. Just a minor increase in interest rates will turn the USD into a stronger currency.

3. The individual members of the European Union are far from united. Some countries were prepared for this crisis whereas others succumbed to it. Greece has already suffered from a reduction in its credit and Spain also faces a similar situation. The EUR will be under pressure soon as both these countries use it.

But still America also will have a fair share in terms of challenges such as growing deficit and further financial issues. Possibly the most critical part of the meltdown is over and slow and steady recovery will soon begin. So the USD will win the battle over the EUR in 2010.