USD at 13.5 Year High

At this stage uncertainty is huge. No one knows what would happen next. A brutal raise in nominal rates means that real rates have not increased substantially. According to Unicredit the US dollar is overvalued and they don't think it will strengthen much more.

The USD Index was pushed up to 101.27, hitting the highest level in more than 13.5 years.

With the 13.5 year high one thing is considered a "done deal" now - The Fed has to raise rates in December.

On the other hand, the Euro is currently undervalued as growth in the Eurozone has maintained some momentum and expectations are that the Euro will begin to appreciate with the coming Eurozone elections.

Speculators anticipate parity with the rest of the major currencies, namely Euro, Sterling and Swiss Franc.

As of now, the EUR/USD is currently trading at 1.0623 with a low of 1.0569.

Chart: EUR/USD D1