As I have posted before, the EuroZone Debt Crisis continues to be a drag on World Financial Markets. The Uncertainty that this creates causes cash to flow to the US Dollar–currently the World’s only Reserve Currency. Money is flowing from a number of other countries, not just the EuroZone.
There has already been a run on the ATMs in the weaker EuroZone countries; however, it should adversely effect even the stronger countries that are tied to the declining currency.
This stronger Dollar creates an additional drag on the US Markets. How so? A stronger Dollar makes imports (from overseas) cheaper and exports of US products (to overseas markets) more expensive. This can effect the Trade Balance–the net of exports versus imports. Thus, it would cause a reduction in revenue for US-based companies that export a good portion of their products overseas.
On Friday, the EURO was hovering around $1.25 US. Some market experts believe that if it falls below $1.25, it could drop even more–considering $1.25 to be a psychological level. Yesterday, it touched just a small fraction below $1.25; however, it did close just above it