Questions are being raised not only about the strength of the euro, but about its viability. A report by the US investment bank Morgan Stanley suggests that the currency might not survive forthcoming hazards. The study, Euro at Risk, (reported by Ambrose Evans-Pritchard) warns that:

the financial markets are becoming alert to the risks from rising protectionism in Germany, a breakdown of EU fiscal discipline, and a likely rejection of the European constitution by France and Holland.

Joachim Fels, Morgan Stanley's eurozone economist, doubts if the newly enlarged EU will ever move to full political union, and thinks the single currency itself is at risk. He cites

the death of the EU services directive and Germany's recourse to wage protectionism to stymie the competitive challenge from Eastern Europe as evidence that integration might now go into reverse.

The study talks of "lethal implications" to the emasculation of the Stability and Growth Pact, which was likely to open the fiscal floodgates. The end result, the study suggests, might be the demise of the euro and the re-emergence of national currencies.

It all seems a long way from the currency which was supposed to replace the dollar as the world’s reserve currency, and to weld the EU nations into a political unit. We live in exciting times.