The euro will fall by a further 10% against the dollar and reach parity with the US currency within a year.
Why do I say that, when most of the world expects the new currency to strengthen against other major currencies? Well, partly for that very reason - the euro is over-owned. When everyone stands on the same side of a boat, it capsizes. And right now, everyone is standing on the same side of the euro boat - the long side.
And little justifies this confidence in the euro vessel. First, US growth will boom as long as the equity market stays up. In contrast, the euro zone is heading for a growth recession. So the Federal Reserve won't cut interest rates, but the European Central Bank will.
Second, budget deficits in Europe will disappoint expectations as growth slows. And European politicians will make sure the economic & monetary union's stability pact is inoperative. One of the key foundations of Emu was the pact's ability to keep budget deficits very low over a full economic cycle. It is supposed to penalize euro governments that fail to keep their deficits below 3% of GDP.