The Vultures are Circling Around the Euro
|May 23rd, 2011||
|Contributed by: The Mad Hedge Fund Trader|
|It has not been a great week for the beleaguered European currency (FXE), (EUO). The chickens, no, make that vultures, are coming home to roost. |
Belgian and Spanish debt has been downgraded. The UK’s debt is under review. The ratings agencies now seem to be taking aim at Italy. Perhaps the only good news for the Euro is that former IMF chief and future French presidential candidate, Dominique Strauss-Kahn, was able to post bail for his sex crimes in New York.
In the meantime, hedge funds are starting to jump on the bandwagon for the Euro short play. Some two thirds of the long positions in the futures markets have been liquidated in the past ten days. We will see the next down leg for the Euro when the reminder gets dumped and the street flips to a net short. As for me, I have been short since $1.49 and am comfortable with the position. Any rally from here, and I will be quite happy to double up.