Dollar/Euro – Do you really want to be short here?


Washington has all believing in the power of Greek and Italian stability...What??!!

Image courtesy of Natascha Farber: The Euro is weaker today as the Fed's Fisher is talking some sanity back into currency markets as he talks of the insanity in Washington, saying the U.S. is a "country in denial".

The euro has seen a huge run on the relative lack of news from the core, successful German elections, and the obvious ineptitude of Washington.

Europe is also cranking out some decent econ stats and is showing real signs of economic import/export momentum. "Stability" from the ECB has led to investors seeking pickup in yield from the bonds of the PIIGS, this also supports the Euro as money flows there.

Having said that, the euro at these levels is not easy on industrial exporters in the region, and last time I checked Italy, Spain, Greece  & co. are still on siesta.

Washington hasn't made this easy but they have made a great set up to buy U.S. dollar weakness.  There is no turning back from the taper.  It will happen, and yields will rise.  The relative attractiveness of this will lead to more money flowing back here.

All of this is U.S. dollar positive.  Sell the euro at 1.36 which is the level back to Feb highs that should prove tough to surpass.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , International , Stocks

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