Euro in Trouble

The Euro was already heading for trouble, that was obvious Sunday at the open of FX trade, but now it's in some real trouble on the announcement earlier today from Merkel regarding the ESM bailout mechanism that is supposed to come online in 2012.

From Reuters:

MERKEL REJECTS RAISING UPPER LIMITS OF FUNDING FOR ESM BAILOUT MECHANISM -SOURCES IN RULING COALITION 


I don't really think the news is that significant being they can't fund any bailout mechanism, but the market doesn't like it nor does the Euro.

 Here's today's reaction during market hours

 Here's the triangle from late last week and the open of FX trade this week.

And here's the support level in the Euro on a daily chart I mentioned yesterday which is now broken. Not good for the Euro and a rising dollar is not good for most risk assets including equities and commodities.

 Here's the short term chart, and you saw the power of 3C to uncover strange behavior or leaks, I'm not going to be shy about saying this, it looks like someone knew in advance Merkel was coming out with this news as of yesterday afternoon. However, it looks like they waited for ES to hit VWAP and the gap to be filled somewhat to give banks a shot at not getting caught on the wrong side of the trade, after all, they'd just have to spend more money bailing them out and if that seems corrupt, well it's just the tip of the iceberg.



 Intermediate 15 min 3C

 longer term 60 min 3C

Long term multi-day 3C.


Let the race to the bottom in currencies begin!