The euro has slipped about 1.0% against the dollar in the first half of January. Yet, given the divergence of growth and monetary policy, many investors and observers remain puzzled by the euro's resilience at this late stage. One can begin with the view the market is being irrational, but that would make any analysis superfluous. A more productive strategy is to assume the markets are being rational and seek to understand the logic. First, let's examine the assumptions. Growth differentials do not seem to be key on their own in explaining or forecasting currency movement. They need to be reflected in profitability ... (full story)