	Article Directory		Article Submission Service		Article Marketing Blog		Publishers		Member Log In

Article Directory :: Finance & Investment Articles

Will the Euro Break Up This Weekend? Still No Deal...

Republish: EasyPublish™
Published: 15Feb2012
Word count: 760
Viewed: 50 time(s)

Get Free Content For Your Site

It's 9:19 Chicago time and still no deal out of Europe.

This market is on the edge of making a break one way or the other. I think we're going down. But this is a pivot point, and a decision is going to be made. What happens at this price makes a difference.

This deal is not great for Greece, and it's probably pushing many of the people of Greece to want to withdraw from the euro. I don't blame them. If this deal goes through, the economic pain will be incredible. I expect there to be a nearly 10% drop in GDP for Greece.

This is accurately classified as an economic depression.

I do not know why the people of Greece are not in the streets right now. Something I'd like to point out - once the deal is signed, enforcing the deal may be just as tough as signing it! Even after the deals are signed, Greece could simply stop abiding by the deals and force Germany to try and collect.

This idea must be going through the mind of the Greek people right now.

The other important part of this deal relates to the perception of the other countries with problems in the eurozone. I no longer call them the "PIIGS", because I think this makes it seem like these countries are solely to blame for their problems.

These countries are not to blame. Ireland and Spain in particular did quite well and were actively conforming with every rule prior to the crisis.

These countries will look at the deal Greece gets and demand better terms. They are in better shape, and their citizens do not deserve to suffer for sins they did not commit.

Please be careful - the euro is starting to look extremely worrisome. I am beginning to suspect the euro could breakup in the next several days. This weekend could be a turning point for breakup worries.

EURUSD

The euro made significant lows last week before recovering strongly. The EURUSD came within one pip of it's recent formation lows at 1.3026

It was widely expected there would be a deal on Greece very soon, but this deal refuses to materialize. I suspect this deal could cause a large, one day upwards move in the EURUSD up past the 1.3200 -1.3300 danger zone I identified last week. In fact, I think many people are banking on a move like this.

However, the recent price action is also forming a decending triangle. This is typically taken to be a bearish formation.

The recent news today was a statement from German President Merkle, who stated "Greece is running out of time". Now as my major contention over the last few months has been Germany is on the hook for payment nearly no matter what, it appears to me Greece is doing Germany a favor and not the other way around.

GBPUSD

The British Pound moved in sympathy all day with the EURUSD.

USDJPY

The yen retreated slightly today. The expectation has been the recent very slight decline in the yen decreases the willingness of the BoJ to intervene.

USDCHF, EURCHF

I'd like to point out the Swiss Central Bank, the SNB, has created a template for successful interventions. Intervene in massive way, and release a statement with the words "unlimited amounts of _____" (fill in the blanks with our home currency) in it.

As a result, I suspect the markets have a bit more respect for the big nations of the world who are sovereign in their currency: USA, Japan, the UK, ect.

This will result in less testing of the will of central banks in the future, but…the SNB hasn't been tested yet on this intervention at all.

I'd like to point out the EURCHF has drifted back to the stated intervention level of the SNB. What does this mean? Well, it could mean any CHF buying could see equal amounts of EUR buying, as the SNB converts any buying at the 1.2000 level from CHF into EUR.

I expect a test of the resolve of the SNB at some point soon, and something like a massively disproportionate response from the SNB in response.

Michael Sankowski lives in Oak Park, IL and when not playing the guitar, has been a professional trader for 20 years. He's traded billions of dollars on four continents and is a well-known financial writer. He is the President of GenerateFX and Trend Following 101 and is a top-ranking author on Seeking Alpha.

EasyPublish™ this article - publishers click here