The euro is dead!


The crisis goes to the next phase.

Do you remember the “currency war”? Thus my contribution was called from the 11th of October, 2010. At that time the fear of an other devaluation of the US dollar circulated in the media. Still few weeks before the decay of the euro was feared – in the midst of the crisis around Greece – with courses less than 1.20 USD. What nonsense! Do not confuse yourselves from these setting scenarios. How does the situation look all around the euro today?

Review

On the 11th of October, 2010 I wrote: In comparison to the beginning of the year the euro takes down compared with the US dollar of only about 2.5% more weakly. On the 07th of June, 2010 – with 1.1877 USD – one more deficit of about 17% had been. At that time – exactly in the low-pressure area – many investors have capitulated and have fled in panic from the euro. Today the US dollar should stand again before his end. Technically looked the euro up to now has not carried out any more and no less than a 3 wavy upward correction compared with the US dollar. Besides, the level of the technical maximum correction has been reached. Now at least a bigger correction of the euro is to be expected – to all calls around a supposed dollar crisis in spite of – again.

Euro-USD of topical day chart

This has nicely fitted. The correction announced by me nearly point-exactly took place. The euro has compared with the two US dollar equally long Down wave qualified. Now at least a technical upward correction becomes likely again. The gossip around the crisis in Spain, Portugal and now also Belgium should head shortly again for a climax or have reached this already.

Euro-USD in the long term in the month chart

The fear of an euro-decay has become again on the dominating subject in the media. The game with the fear of the investors does strange blossoms.” The euro is dead” headlines a stock market letter of a known American “investor’s custodian”. One gets recommended in the wallet to check whether one owns euro-bank notes with the supposed “bankruptcy code”. The served on draught nonsense seems to know on this subject hardly borders. But the game with the fear functions. The media long-term bombardment of Portugal and Spain – now also of Belgium – shows effect. The Spreads to the German loans have reached record values since introduction of the euro. While one at the beginning of 2010 (one may hardly believe it) for Spanish loans got similarly high sentences as for German loans, has risen of the Spread today almost on full 3 percent points (Spain 10 years with 5.51% – Germany with 2.67%). A development historically hardly to be found in so short time.

Nevertheless, the look at the long-term Chart in the euro-USD relation shows that these “currency crashes” are always only from short duration. Note above all that the euro reached on the 07th of June, 2010 his low-pressure area with about 1.18 USD and now – in spite of which takes down expanding euro-crisis – with scarcely over 1.30 USD. The markets themselves seem to see the subject more relaxed than the media want to explain to us. The game with the fear just provides for high rates.

Result

In spite of the intensifying euro-crisis and an expansion on other affected countries, the euro of his low-pressure area from the summer has not reached long ago any more. Relax and think above all worldwide. Then you recognise fast that a weak currency means always also other strong currencies in the reverse. For European investors a weak euro is an excellently thing. The currency profits in 2010 in the US dollar, Swiss franc, to British pound and also towards almost to all currencies of the Emerging Markets are substantial.

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