The euro, which made huge gains against the dollar in the wake of 2008's financial crisis, has come plummeting back to earth amid fears that the Greek credit crisis would spread and undermine the European Union (EU). The euro's decline has meant a sharp rebound for the dollar, which according to respected market researcher Bespoke Investment Group LLC, is now "extremely overbought."
The euro has plunged some 21% versus the dollar from its all-time high back in 2008, Bespoke says. And while it is still above its historical average of $1.183, it is currently less than 2% above its 2008 low.
Meanwhile, the U.S. Dollar Index has rallied over 14% since its short-term lows in November, and it is up 3.5% this week alone.