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Forex Commentary EUR/USD February 14, 2012

First off I should apologize for skipping yesterdays commentary. I thought since I put out a weekly wrap up that I would give Greece a break and you guys for that matter. I received a lot of emails asking what happened so I am sorry and it wont happen again. Anyway I think you will enjoy todays.

WE HAVE A DEAL! Well we have had the Greek government pass the law putting their promises on paper to make the Troika happy so they can get the second bail out. The bail out package does still have to pass the German Parliament and a couple other countries as well so its as good as a done deal and Greece will get the money and avoid default for now.

Having said that the Euro is acting like it just got beat up in a bar fight. Which goes to show that all this euro pump over the last couple weeks was not any thing more than a stop hunt/short squeeze just as I said. The CFTC did report last week that the Euro shorts decreased by a full 10% in a week so it seems they may have pushed enough of us out and may continue the drop.

As I was reading over my news yesterday I found a couple of articles that I thought were aggravating to say the least. Both were about the German finance minister Schaeuble. On the one hand he is quoted as saying Greece “will be saved in one way or another,”though the country must “do its homework.” here this guy sounds like he truly wants to save Greece but that’s really not the goal of the bail out. The true goal is to save German and EZ banks. I think he could care less about Greece and agree with most of the reporters that he really wants Greece to exit the Euro but wants to make sure the contagion will be contained. This was him yet again showing his other face when talking to the Portuguese finance minister Gaspar. Saying that after the boot has been firmly placed on Greeces throat (my words) then the Germans will be more than happy to relax on the Portuguese bail out package. You can see the secretly taped conversation that Portuguese TV had a field day with.

Now I have to say I agree that Greece should have never been let in the Euro but the fact remains that the EZ requirements and checks and balances on a countries entry were lax to say the least. Not only that but this whole experiment was troubled from the start because there was no plan to help the structurally weaker countries become more competitive. The fact is the Euro never had a chance because the whole project was designed so countries could be still sovereign nations and do what ever they wanted while at the same time enjoy living like the Jones’s next door with nothing in the way of balance and no way to pay for it. Then they perpetuated the illusion of balance by piling up more debt. It seems to me they are getting just what they deserve by thinking they could have their cake and eat it too. I refuse to believe that the powers that be at the euros inception didn’t have an idea that this would happen of which begs the question of “was this all part of the plan?” That remains to be seen.

Now having already heard all the talk about how Greece hasn’t fulfilled many of the promises from the first bail out of which is true one has to ask just what would Greece look like today if they had? Well I also ran across this article which explains it pretty well and gives a small history lesson of how Greece was there to help Germany when the worlds boot was on their throat but now that the shoe is on the other foot Germany isn’t giving any slack to Greece because just as the US made an example of Lehman before they bailed every body else out the Germans want an example of someones head rolling first and that just happens to be Greece.

Ok enough ranting lets look at the charts. The daily has made a clean roll over and formed a very bearish pin bar closing on its lows. Asia has already tested Fridays lows from last week and found some support so now I would be expecting a retest of Mondays lows around 1.3180 and/or the clear stop run before shorting today.

Happy trading and be sure to check out the last couple recent trades I posted today.


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