Forex Success

The end of the Bretton Woods treaty, resulted in the birth of the foreign exchange market and the free fluctuation of the exchange rate from the simple mechanism of supply and demand.
In the year 1973, during Richard Nixon´s presidency, there was a breakthrough in the international monetary system: The end of convertibility of the currency in relation to gold allowed currencies to be flexible and changeable to fluctuate freely according to market conditions.
Over the last thirty years, several events occured in the world that marked people’s lives. The end of the Cold War after the fall of the Berlin Wall in 1989, was the breakthrough that made the market definitely reign around the world.
The facts elapsed in the last times are one of the factors that determine economic policies. The foreign exchange market is not out, because the logic it´s immersed within this economically globalized world, and that is why it is affected by the decisions that are made in the centers of power.
Euro´s strength has been one of the great surprises in the currencies world, since few people expected it to reach the top of USD 1.50 per euro, but this happened and gave air to American businesses that export. The rise of the euro has helped to diminish the impact of the mortgage crisis in the United States and probably if the situation ontinues it will continue disminishing the impact.
Too many obstacles are impeding the recovery of the dollar, the first obstacle is that, by this time, the differential between the rate of the Fed (Federal Reserve) and the ECB (european Central Bank) no longer exists, now, the cost of money in the old continent exceeds the American one, and this is attractive to investors, which creates a greater demand for foreign currencies such as the euro.
The present situation was not consistent with what ocurred in early 2007 when interest rates were at 5.25% in USA and 3.25% across the Atlantic. Nowadays rates are at 3.25% in America and 4% in europe, a situation that results in decreased interest on investments in dollars, and growth demand for currencies that were previously relegated due to the stability and performance that the American dollar used to have.