Back To The Future For U.S. Dollar, Euro?

By John S. McClenahen By yearend the value of the euro, the common currency of 12 of the 15 European Union countries, will be back below the U.S. dollar. At least that's the forecast from Merrill Lynch & Co., New York. The euro's value has been below that of the dollar for much of its short history. But with the U.S. recovery from recession slower than anticipated and questions about U.S. corporate accounting being raised daily, the euro has been moving toward parity with the dollar in recent weeks. On July 1, the euro/dollar exchange rate was 0.9893. "We don't see any dollar freefall, but parity is probably near at hand," says Merrill Lynch. However, as the U.S. economy gains strength -- and Merrill Lynch is bullish on growth -- new trading ranges will likely be defined, says the securities firm. "And we believe the euro will be below parity at yearend."

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