While many others are dissecting the tussle in Brussels for hints as to the union’s future, I thought it would be a good time to revisit the euro’s chart.
Our last forecast [June 10: Currents, See?] forecast a run up to 1.28ish by June 15, followed by a dip to 1.25 and return to 1.2875 around mid-July.
With the pair at 1.2638 after the latest “Spain is fixed” rumor, I posted:
“I suspect the euphoria over the Spanish bailout will be relatively short-lived. After all, putting the rest of the eurozone in harm’s way seems like a better way to get them downgraded than it does Spain upgraded.”
Sure enough, the ramp fell apart and the pair was trading at 1.2441 by the next day. It took the stuffing out of the next leg up, leaving it a little short of our 1.28 target at 1.2746. Likewise, the next leg down was a little deeper than expected.
As I write this, the Brussels bunch is just sitting down to cappuccino, positioning and posturing for the battle ahead. In the end, I expect the Germans will come through for their less fortunate neighbors — kicking and screaming, of course. Yes, it sucks for them. But, I don’t see that they have a choice. It’s a situation only the Borg could appreciate.
Considering the likely sturm and drang, it’ll be a sheer miracle if the markets behave as I anticipate. But, let’s take a look anyway.
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