I just got back from Europe yesterday morning...

And I have to tell you... right now, Europe is one of the best and worst places to visit.

I've been fortunate enough to visit dozens of countries around the world. And I still count London and Paris at the top of the list of "must-see" cities.

If you haven't been, you must go... just not now!

You see, prices in Europe are insane for Americans...

A taxi from London's Gatwick Airport to the city will now cost you US$200, compared to US$50 for the same trip in New York. And plan to pay at least US$500 a night for a Marriott-like hotel room in London. (For that you get a small bed, period. Anything else will cost you more.)

Since the room will cost you so much, and since you'll want to do some sightseeing, you figure you'll save on food, right? Not so fast...

Even a basic McDonald's Big Mac will cost you a lot. As I mentioned inTuesday's DailyWealth, the recent edition of the Economist magazine says a Big Mac costs a "whopping" US$4.57 in England. It's nearly 30% pricier than in the U.S.

The problem now is the exchange rate. Just like stocks and real estate, currencies can get outrageously expensive. Right now, European currencies are as expensive as they've ever been.

It's time for them to come back down. And it's time for investors to bet against them. One factor that's going to work for this bet is interest rates...

When the interest rates in one country are higher than another (all things being equal), money will flow to the country that pays higher interest rates.

Since Fed Reserve Chairman Ben Bernanke's been trying to pry the U.S. out of its housing mess, he's cut interest rates to artificially low levels (2%). Meanwhile, the Europeans haven't given enough weight to the risk of recession, and therefore haven't cut rates. The last move was a hike in rates to 4.25%... So money has flowed out of dollars and into euros.

I don't like to bet on long-term interest-rate movements. But as we look ahead, the interest-rate trends may reverse... Europe is sliding toward recession. Manufacturing is down in part because European companies can't compete anymore, price-wise. Their products are too expensive at these exchange rates.

Interest rates are a key tool central bankers use to head off recessions. Soon, Europeans may need to cut interest rates to "save" their economies.

Meanwhile, we've already done this in the States. Bernanke may need to raise U.S. interest rates from their artificially low levels. We're now ahead of Europe in the cutting and hiking rates game.

England and the rest of Europe originally thought they were immune to the problems we're experiencing in the U.S. But it's turned out they're not... So the interest rate advantage Europe has enjoyed over the U.S. could be ending.

Of course. But the euro "rubber band" is stretched as far as it's ever been stretched. That means expect a rise in the dollar, and a fall in the euro.Today, the dollar is incredibly cheap versus our major trading partners – the cheapest it's ever been. Could it get cheaper? Said another way, could the euro continue to get even more expensive?

Good investing,

Editor's note: Steve Sjuggerud is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.