Well folks, it looks like the Euro is getting its but kicked by the USD. It seems the safe bet right now is to short the Euro – ie short eur/usd. Here is a forex news blurb from Action Forex that I believe explains this:
Euro drops sharply today and breaks through 1 year low of 1.3114 against dollar. In spite of the EUR 110b bailout packaged announced over the weekend, markets are still unconvinced that the fiscal debt crisis in Eurozone is solved. Investors are concerned that there are still a lot of obstacles ahead and there are still much risk of contagion spread. There are even rumors that Spain will be the next in line to apply for financial aids. CDS on Greece is back above 680 level today which implies over 40% probability of default over five years. CDS on Spain, Portugal, Ireland and Italy also rose back to above 180, 310, 200 and 140 respectively.
Notice that part about Spain? Spain has always been somewhat of a EU spendthrift and I would not be surprised if it is the next country to approach the ECB with open palms.
Now if you’ll excuse me I gotta get back on the “punish the Euro” bandwagon.