U.S. Dollar Collapses Against the Euro in Forex Trading

Greenback down in currency trading

The U.S. dollar has collapsed against the euro in forex trading on the currency market this morning. EUR/USD smashed through 1.4100 today, and is remaining there, in spite of a few feeble attempts by the dollar to reclaim some strength.

One of the main factors in the euro’s rally in forex trading is the latest GDP news coming out of the U.S. economy. Instead of contracting by 6.1%, as originally thought, it appears that GDP is only down 5.7%. That misses the target mark of 5.5%, but not by too much. And the new number is certainly much better than the original reading.

This news shows that the U.S. economic contraction might be slowing. It also points to an end to the recession — possibly by the end of the year as many economists are predicting. As a result of the new confidence in the economy, the greenback is expected to weaken.

Short-term, there is dollar weakness expected, since the focus right now is on the immediate economic data. There might be some hope for a medium-term dollar rally, if some of the current confidence and optimism fade. In the long-term, though, there is little doubt that the U.S. dollar is expected to remain weak against the euro in forex trading. Global economic recovery is expected to send forex traders looking for higher yields than what the dollar offers.