The euro may be looking forward to a brighter future. Since its introduction in January 1999, the currency has almost constantly lost value. Certainly the currency has seen some bad times and no one predicted it would fall more than 30 per cent from its initial highs. But 2001 may be the year that its fortunes turn.
Markets tend to follow momentum and do, of course, overshoot.
Until very recently, traders found little reason to buy the currency - and every time they did they lost money. In the past few months that changed. The euro did not appreciate significantly but you were as likely to make money buying as selling the currency. If the trend is now towards appreciation, the markets are likely to follow it. There are also few, if any, economists or market watchers who believe the euro is fairly valued.