There have been a few short term false starts, but this time, it does look like the euro has a lot of room to drop against the dollar. Between the eurozone banks borrowing spree plus the hoarding, it feels like 2008 all over again and we know how that story played out. The Guardian:
The euro weakened about 1% percent against the dollar and the yen on Wednesday, the day before an important auction of long-dated Italian debt, while US stocks slid more than 1% on concerns about the economy in early 2012. The European single currency hit a fresh 11-month low against the dollar of $1.291 and a 10-year low against the yen as data showed banks were hoarding the cash recently injected by the European Central Bank rather than lending it out – a bad omen for the European economy in 2012. "If European banks are still this concerned, it's not a good sign," said Karl Schamotta, senior markets strategist with Western Union Business Solutions. "That underlines the possibility that this liquidity crunch is getting worse and will continue into the new year.The euro also hit another record, a ten year low against the yen.