Eric the Economist says

The euro rose 1.3 cents this morning to hit a new all-time high of 1.4796. The markets now sense 1.50 is inevitable, regardless of the fundamentals and traders could use the thin trading conditions this week to push the advantage home. There is growing complacency though and traders refuse to recognize the significance of falling stock markets outside of the US and the softer data ebbing out of the euro area. This is not solely a US problem and the idea we are going to witness a booming euro economy into 2008 against a recession-hit US is far-fetched to the extreme. The euro is effectively the most over-valued currency right now and it is trading beyond its worth, but markets still refuse to sell it off or allow it to correct. The currency has now risen 14 cents against the dollar since the middle of August without a meaningful correction and that is unprecedented for this pair. The dollar has again been undermined by underperforming US stock markets, which has brought the usual suspects demanding a further Fed rate cut. There was even a rumour across Asian markets during the night the Fed were about to announce an emergency rate cut today. The view that Ben Bernanke will single handedly save the economic world by continuously cutting US interest rates is madness, but this seems to be the view which prevails right now and which is dictating market direction.