Dollar ups and downs

Back last June while we were in France, I was talking to a young bank employee, telling him in no uncertain terms that the U.S. Dollar would soon stop its decline against the Euro and turn around into some more glory. At that time I had a sense that its decline couldn’t go forever as one my many hobbies or mania (I should say) has been to maintain a keen eye on foreign currencies as they dance against the greenback. I’ve been tracking its performance for the past thirty years and have observed its ups and downs without always understanding the profound reasons behind its relentless fluctuations. So this past spring when our Dollar was trading at around 65 cents against the Euro, I sensed that it was getting very close to bottom if not already there. I was almost right as its worst performance would be registered a few weeks later in the 62 cent range (the last time it was that bad was in 1979, and it would then more than double over a six-year period to about $1.37 against the Euro-equivalent in 1985!). Today, and for reasons that I couldn’t have articulated at the time, the American currency has made a spectacular comeback, trading today at close to 72 cent! The reasons for that rebound is the onset of a massive recession in the rest of world as it’s slowly catching the bad cold that has made the United States sick for a year or so. So will the Dollar beat its best performance at about $1.15 set in 2001 against a spanking-new Euro, or be able to return to its old 1985 record? I doubt it at this point, and I’ll settle for parity within one year. We’ll see…