If you think the Greek saga has been completely digested into the FX markets it is our opinion that you are wrong. Yesterday’s altercation on the dance floor between Greece and Germany was public. Greece denies it, but technically it appears that Greece has asked for an extension on its payment terms.

And while Germany is the lead actor in many of the discussions regarding the debt situation, many Eastern European countries are not pleased either who are being asked to be charitable. Slovakia for instance is none too pleased that it is being asked to give more when the minimum wage of its country is sharply lower than that of Greece.

Discussions continue today and the deadline for this chapter in the saga to be worked out – is the 28th of February. And if things go badly today, investors should not be surprised if Greece starts leaning strongly towards a Cyprus like ‘downfall’ in which capital controls are instituted. The Single Currency would then come into question, along with the institutional mandates and confidence in the European Union to manage its affairs.

It appears that this is almost turning into a game of chicken between the Greeks who are demanding ‘a bailout’ for the bailout they have already received and those lining up against her which have been her previous donors. The political game is what is important in this volatile mix, this because investors are watching to see if Greece’s ‘sister’ nations get involved who have been struggling with austerity measures and would like to have more room for wiggle room – Spain, Portugal, Italy.

While traders can certainly take advantage of the movement in the EUR they will have to be careful of fast moves which could take them out of speculative plays quickly when margin accounts are being put to the test. Investors who are looking longer term, could be eyeing a lower EUR. Yes, the ECB will try to protect the Single Currency and keep it above 1.10 versus the USD, but if the Greece crisis should start to produce demands from others – particularly Italy – then the EUR will be under some very dark shadows for the next couple of years.

Greece is only a small part of the total European economic dynamic, but if it should move closer to the edge today and coming weeks, threatening to jump off the cliff and end its EUR days – many bond holders and countries will be left holding a large unpaid bill.

Crude Oil continues to trade near lows and may have some room for an additional drop with a support window near 47.00 to 48.00 USD for WTI.

Equity markets worldwide will continue to watch the saga playing out in Europe, but with stocks continuing to be near record highs any excuse to take the market a little lower and cash in profits should not be discounted. Many believe U.S. markets are over valued but the trend has been the friend of many investors and it may not be time to step in front of the train.