Which way for the euro now?
When the euro was first launched in January 1999, the consensus was that a strong central bank, a huge trade surplus and low inflation would drive the new currency upwards from its opening level of $1.17. I had little confidence in that view.
The divisions in the speed of economic growth and in the policies of national governments in the eurozone would make it difficult to conduct a clear monetary policy. Above all, the failure of Europe to deregulate markets, restructure its corporate sector and shrink the size of its state would soon weaken the currency.
So it proved. The euro sunk below parity with the US dollar in January this year. But here I went wrong. I became a euro bull. I reckoned the US economy would slow while Europe's rebounded and the interest rate advantage of holding dollars over the euro would also disappear.
But that hasn't happened.