The euro finally could be about to rise. This will please not only central bankers in the US and Europe but governments and, of course, importers. It may be less good news for exporters but they're enjoying such a huge competitive advantage they can hardly complain.

Both the European Central Bank and the US Federal Reserve point out that the euro is undervalued. Further falls in the euro would increase the threat of inflation in Europe and, according to Medley Global Investors, would also focus attention on a potential "dollar bubble". Both could have profound repercussions for interest rates and indeed equity markets on both sides of the Atlantic.

But the problem is, of course, what to do about it. Intervention is probably off the agenda although the mention of it this week when the euro was already turning did the required job. Traders were afraid to sell. After all, intervention which is going in the same direction as the market is far more likely to succeed than that attempting to go against it.

One of the main reasons for the euro's weakness has been the huge capital flows from Europe to the US. Last year these incorporated both investment and private capital. This year the trend appears to be turning. According to balance of payments figures released last week, investment flows are still leaving the euro zone, as fund mangers remain negative, but private capital flows are actually slightly positive. Some merger activity going in the euro's direction should also go a long way to reversing these flows and, if sustained, that will prove very beneficial for the currency.

If the forecasters are right and the US does finally begin to slow next year and the euro zone to pick up, these flows should at least become more balanced.

According to the OECD this week, growth in the US will slow to 3 per cent next year while euro zone growth will accelerate to 3.5 per cent. That should lead to an appreciation in the euro as investors come to believe that they will make as much or almost as much in the euro as in the US.

On top of that, according to Medley, there is the possibility that attention is beginning to focus on the massive US balance of trade deficit.

The US has been acting as importer of last resort for the rest of the world since before the Asian crisis and trade flows are now as much as $30 billion (€32 billion) a month from the US.

This could well have been the reason for dollar selling for over a year now but last week the figures did come into focus. The problem is that there are few Treasury bonds being issued - contrary to popular belief, mortgage bonds or Fannie Mae are apparently not guaranteed by the government - the stock market is looking volatile and property may also be close to the top. In that environment, the euro zone could well begin to look more attractive.

European Central Bank (ECB) officials hopes that a combination of converging growth and a better communication strategy will soon begin to reap serious dividends.

For the past while most ECB members have been talking in the same words. This on-message charge has been led by Bank of France president Mr Jean Claude Trichet and by his Bundesbank counterpart Mr Ernst Welteke and, in a more low-key way, even our own Central Bank governor Mr Maurice O'Connell delivered the same message at a press conference last week.

All talked about the substantial undervaluation of the currency. The Bundesbank has even mentioned a possibility of undervaluation of some 20 per cent to 30 per cent.

But in a change of direction, the central bankers also chose to highlight the progress European governments are making in structural reform rather than knock the same governments for not doing the job.

The inevitability of a euro rebound once growth rates converge was also mentioned. At the time of writing the strategy appears to be working.

If all this works and the euro does indeed start heading back towards parity, what will the result be? According to most commentators, such a move should slow the pace that the ECB will raise interest rates.

At the moment many assume that rates could be heading as high as 5 per cent but with a stronger euro this could come back to around 4.5 per cent and happen over a longer time period.

Everything still hangs in the balance. US jobs figures today will be crucial. After that, the ability of the ECB and other euro zone officials to keep on message could well determine the success of the venture. As Medley says, if the ECB and the Ecofin ministers can stay on message, the markets will do much of the rest of the work.