EUR/USD: The EUR continues to stink like a wet dog, which makes it a long-term trade if you are a seller. The problem is that the USD has an odor of its own too because of the actions by the U.S. government and the Federal Reserve. Europe as an economic entity has major hurdles facing it and this is not going to go away any time soon. In fact the problems will escalate. What is saving the EUR from falling down the staircase completely is the false air of confidence that European ministers desperately attempt to surround the Single Currency with every day and the stability of Germany. Just close your eyes boys and know everything is alright is practically the refrain heard wide and far. In the meantime continue to monitor the health of Spanish and Italian bonds in comparison to the German Sovereign debt issues. This will let you know short-term and long-term thinking.
An interesting currency if it should survive the sinking of the EUR is the GBP. Like the USD the Sterling has plenty of issues. The Brit economy is nothing to brag about, scandal mongers are everywhere in the U.K. press which is not overwhelmingly business friendly. The BoE is trying to cover their own skin from any incoming fragments that could burn them in relationship to the LIBOR ‘crisis’ – yes, when it rains it pours in good old London. Having said that the GBP at the end of the day is not the EUR and the British population should be thanking their lucky stars for that. In other words the GBP may be a long-term safe haven because it will certainly survive as a currency, while the EUR as we know it – may not.