The EUR/USD continues to line the pockets of the bears. It is astonishing to me that there are still people out there that think the bearishness in this pair is exaggerated, that somehow the European Union is going to wave magic pixie dust on the problems and suddenly the banks in Portugal, Spain, Greece, and Ireland are going to be strong. Somehow the debt issues will simply go away or that after centuries of conflict between each other, the member states are happy to take on pain for the irresponsibility of others. Anyone who thinks the Euro is going to work out in its current form must know nothing about human nature.
Will the Euro survive? I don’t know. I doubt it. Or maybe I should say that I doubt it will in its current form. There are far too many problems for many of the poorer countries that are involved. I recently read an interesting article about how the Greek tourism industry has been shafted by the higher valued Euro. Making matters worse, a lot of tourism seems to be going to their old nemesis, the Turks. I know that when Greece moves to the Drachma, it will bring a lot of North American and European travelers. I would love to see Athens myself.
1.25 is gone
The 1.25 level has given way, and the market is now sub-1.24 as I write this. This shows just how heavy the market really was when we formed the three shooting stars in a row just above the 1.25 level. I warned that it was a significantly bearish set up, and we have now seen the fruits of that attempt to break things down.
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Looking forward, I think the 1.21 area is probably where we are heading at this point. The rallies would be sold by me going forward, and I am willing to add to my short positions as well. I think this move is almost a given at this point. As for buying – I simply cannot fathom doing that at this point as the situation is so bad.