What a year 2008 has been for the European single currency and the Euro area in general, as the economy and currency went from “riches to rags” in less than 10 months! Trichet and his pals did everything in their power to adopt a positive stance back in January, with consecutive interest rate hikes for many months before the economic data started to contract. We had it all; good economic news from Germany, positive market sentiment from both the IFO and ZEW numbers, outstanding GDP growth plus a feeling the Euro zone’s economy would outperform others in the coming years. Good things don’t last forever though, as the US subprime mortgage crisis managed to spill over into the Europe, leaving the European Central Bank dumfounded and the Euro a victim of an economic slump. The Euro has lost more than 20% of its value against the dollar and other major currencies, traders have become wary of the European currency after Germany entered officially recession and the constant bad economic data indicated the whole Euro region is on the verge of recession. What started as a simple campaign by ECB officials to promote price stability via a strong, aggressive monetary policy, ended abruptly when Trichet changed his stance by consecutively easing the rates during the last meetings. Analysts predict that due to the deteriorating economic conditions, the bank may be forced into further cuts, with some even suggesting rates will follow the US by dropping below 2%. The euro may continue to lose ground against the dollar in the coming months due to Europe's grim outlook and the dollar's new found strength and traders may have to face the fact the Euro's glory days appear to be over, as only a clear change in the economic outlook will give the euro to take the upper hand once again!