Short on the Euro and it goes to zero...

Can you classify it as a system?

Seriously, what if the Euro dissolves and you are short on it? The pair would disappear, or would it be valued at zero?

Interesting...

There will undoubtably still be a legal instrument called the "euro" and contracts in it will still be valid, the question is its intended future.

There are two scenarios, with opposite outcomes

a) the weaker countries, i.e Portugal & Greece and maybe Spain get expelled by the ECB. Then the Euro becomes the Northern Euro, aka Neue Deutschemark. This Euro soars 2000 pips in an hour.

b) German voters revolt and don't want to subsidize any more lazy southerners, and they force the country out of the euro to the deutschemark. This euro plummets 2000 pips in an hour. Note that this case divides Germany politically as its exporters benefit by being in the euro since it is is set at a fairly low rate compared to a free-floating mark.


I believe scenario (a) is more likely than (b) and with everybody and their dog being short and getting shorter thinking about the "breakup of the euro", one ought to consider what it would really mean. If you amputate the bad stuff from the euro, wont' it get stronger? The sudden realization of this reality (nobody has talked about it in public) could result in a very violent snapback short-covering rally.

I don't think it has more than a 10-20% probability (vs (c), nothing happens and euro slowly grinds through the sewer) but the consequence would be dramatic.

I don't think this belongs in the trading systems section........

and I hope it don't happen!

bollocks, countries that joined the EU and use the euro as national currency don't get expelled because of crashes of this kind

secondly, most people bet on parity but this means betting on EU to collapse and return to pre 2000 quotes where dollar was strong, which isn't a nice thought for EU economists and businesses

thirdly, reading too much post-apoc themed speculation isn't good for objective analysis of reality

have a nice day

Everything around this forum is speculation.

And Euro insolvency is absolutely possible, if Germany pulls out because France won't step up to the plate.

Currency trading is not just about chart patterns.

On the subject of Euro shorts...

With short positions in the CTFC listed as increasing by 10% again for the fifth straight week it looks like a heck of an opportunity for a short squeeze of epic proportions.

maybe, best not to hold trades over night or the weekends!!
I think nothing will happen, everyone was calling for the death of the USD
a few months ago and now it is the strong man on the block.

I think the euro will rise again
and in time will replace the USD.
but we are talking years not days or weeks.

But I do hope nothing happens
as the eur/usd is the easiest thing to trade !!

just my two cents

cheers

teb