I remain bearish on EUR/USD
Nothing has been solved in the EU Summit or the Eurogroup meeting. Spain is walking the same dead end path of harsh austerity, and Italy may also need some help soon. Both these large countries are suffering from unsustainable high yields for too long. After the recent elimination of the deposit rate by the ECB, money continues flowing out of Europe.
In the US, the situation is mixed. For example, jobless claims fell sharply, but another figure favored by Bernanke shows that job growth has practically stalled. This environment is perfect for the dollar: the US isn’t a global locomotive, therefore not encouraging risk. So, the dollar is a safe haven. On the other hand, things aren’t bad enough to trigger QE3 that will devalue the dollar. Unless there is something totally unexpected, there is more room on the downside for EUR/USD, in a gradual move.
Nothing has been solved in the EU Summit or the Eurogroup meeting. Spain is walking the same dead end path of harsh austerity, and Italy may also need some help soon. Both these large countries are suffering from unsustainable high yields for too long. After the recent elimination of the deposit rate by the ECB, money continues flowing out of Europe.
In the US, the situation is mixed. For example, jobless claims fell sharply, but another figure favored by Bernanke shows that job growth has practically stalled. This environment is perfect for the dollar: the US isn’t a global locomotive, therefore not encouraging risk. So, the dollar is a safe haven. On the other hand, things aren’t bad enough to trigger QE3 that will devalue the dollar. Unless there is something totally unexpected, there is more room on the downside for EUR/USD, in a gradual move.
