What’s really to like about the euro?
Inflation is non-existent, growth is still saggy, LTROs are running off and probably won’t be renewed (at least not next week). On top of it all the bank stress tests could uncover some trouble.
The story with the euro has been the resilience over the past four months but at some point you need a growth story. One line of thinking views Europe as a similar story to post-crisis US with investments leading the economy. That might prove to be the case but Europe isn’t running deficits and policy cohesion is less than the US.
At the end of the day, price action is what matters and the inability to get any kind of bounce after the 100+ pip decline in the euro today is a negative signal. If 1.3500 goes, I think it’s finally time for the euro swoon.
For what it’s worth, I’ve been talking about EUR/USD shorts since Tuesday.