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FX commentary EUR/USD January 11, 2012

Fx Commentary EUR/USD January 11, 2012

Hello all

Today I will be focused more on the voluntary debt write downs forced upon holders of Greek debt. The clock is ticking and they need to have an agreement pretty much this week. As I mentioned yesterday there are still many hold outs and the number seems to be growing as noted in a report from Ekathimerini yesterday. This doesnt even consider the fact that the IMF has said that even the 50% write downs that they are working to get will not be enough to get Greek debt down to sustainable levels. I have also read reports that said a 90% hit for private holders would not be enough and suggested that the ECB and other central banks would be in the cross hairs if Greece is to have realistic debt levels to be able to get out of its mess. This is going to get interesting really quick. The kicker is going to be the hedge fund hold outs for now. If the IIF does manage to get cooperation (which is doubtful considering these hedge funds have been buying up Greek debt that matures on March 20th at 40 cents on the Euro) it will be positive for the Euro for the time being until the market realizes that its not enough for Greece to get out of the hole. Then it all starts again in a few months. Keep one eye open when your sleeping LOL

I am also taking note that the decoupling theory of the US getting better while Europe sinks is becoming more prevalent with the Dow and S&P making modest moves up while the Euro pretty much stays flat. I expect that to continue as long as the news from the US improves. Once it starts to lose traction then the risk on/off scenario will be back in full force.

As for the charts, the daily was rejected at Thursdays close and watching price action intraday it sure looked like there was massive selling into the rise again. As you can see I am short from the highs at 1.2813 stop at BE and we will see how she runs. Considering Tokyo isnt open yet as I write I would be looking to see a stop run above or below the accumulation level marked on the charts. I have to say the background sure looks to be pointing for a down move today considering the move from the US open.

Well I got distracted as usual writing this up and you can see the Euro has dropped thru the floor. At this point I would be looking to enter on a faded move to the upside.

Be careful out there


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