Interesting how portfolio managers and speculators- the herd in general- clings to long dispelled theories.

Note the large shift away from the dollar and into commodities on QE2, which in fact did nothing of consequence apart from turning psychology.

And the idea that rate hikes support a currency has been long dispelled by extensive research, including decades of central bank research.

Euro Approaches 18-Month High Versus Dollar Before ECB Decision

By Lucy Meakin

May 4 (Bloomberg) — The euro rose against the dollar, approaching its strongest in 18 months, on speculation that European Central Bank PresidentJean-Claude Trichet will signal further rate increases after policy makers meet tomorrow.