Europe aside, the glimmers of economic strength in the US are helping the late in the year dollar push.
CRB Commodities Index
EURUSD looks very interesting on a longer term chart, which I've annotated with the various QE announcements. As I said yesterday, the Bernank is certainly ready to go, and the Fed minutes suggest ongoing concerns for the economy. Recession in Europe, a serious slowdown to 7% GDP (or lower) in China and weak Q1 data in the US wold certainly be enough to kick the QE3 plans into action.
Europe should continue to muddle through, or so we hope. And we do hope for this - the alternative is pretty scary. For all those wishing for a collapse in the EU, I do hope that they are busy honing their skills as an artisan. Right now the EU plan is to take the heroin patient off the methadone they have been subsisting on and provide bread, water and a bible. The Germans, in the meantime, will continue to seethe with misplaced righteous indignation. Let's not forget that it was Germany who got a currency, a monetary policy and an exchange rate mechanism that was enormously beneficial to their manufacturing system and competitiveness. Their banks then lent billions to profligate periphery countries, and now they want the same countries to suffer in purgatory.