In the past year, The US dollar has gained about 25% value compared to the euro. Theoretically the value of European companies probably hasn't gone down by 25%, but my USD should buy me roughly 25% more international equities than a year ago all else being equal. Does a strong dollar make this a good time to go a bit heavier in European stocks than usual, for example 50/50 US/Intl rather than 70/30? Or is it wiser to leave my asset allocation alone and let annual rebalancing take advantage of these disparities automatically? What are the arguments for and against?
I ask because I'm trying to form my own opinion on this and want to hear other's perspectives. While US stocks have outperformed in the past, assuming I can't know whether US or international will outperform in the future, intuitively it sounds like a good idea to tilt international when currency exchange rates are favorable and tilt US when they're not.
What are your thoughts?