The euro's long run is finally over.

While nothing is sure in markets, the tide appears to have turned for the dollar. It seems pretty clear that we're at one of those 5- or 10-year inflection points for currencies, and that there's been a definitive turn for the dollar. Even Goldman Sachs reversed course in its latest report, saying, according to today's Wall Street Journal (paid subscription required):

"We have changed our view and think the dollar has bottomed," Goldman Sachs said in a research report Thursday. "Until the end of the year the road may remain bumpy ... but the underlying picture has turned much more dollar-positive."

This morning in Europe, it was sitting low 1.47. And you'd have thought, even WITH a reversal, that the euro would have recovered a bit on some profit-taking. So it's feeling like a pretty definitive break. I watch it very closely.

So there you have it. If there's one thing I've learned over the years, it's to put very little stock in that sort of report. They basically align projections AFTER trends have reversed, and tend to be very cautious in the amount of movement. So I guess if you shouldn't listen to Goldman, certainly don't listen to me. But I think with the current feel of U.S. and European markets and a new U.S. administration coming into office that we're headed back to par in 3-5 years. I've been saying it for awhile, but was incredulous when the euro broke 1.50 (SURELY that was the top, I said) and ran all the way to 1.60.

Some kind of jolt into the economy could still change things, but at this point it does feel like it would have to run against the long-term setup in the market.

What does it mean for your portfolio? Well, I'd be bearish for European equities and like the U.S. market in that paring, which may get the double stomach punch of weaker returns AND a declining currency. Flows say that other investors are thinking the same way. You never know with currency, but it's worth looking at and thinking about as you rebalance. A lot of fundamental factors STILL do not favor the dollar, including huge current accounts and trading deficits, but the fundamentally weaker (and likely less-resilient European economy) seem like they're trumping those factors and driving the turn, 

Finally - can't wait for Matt's full review on the tax treatment, or possible tax treatment of all the various currency ETFs.

That wraps up a fun market-timing week of content from a decidedly NON-market-timing Matt and Jim.