Why is Euro still above $1.40?

Honestly I'm really amazed that Euro is still above $1.40 against the dollar. It is true that Greece has been bailed out and it won't default immediately. But have the fundamental problems been really resolved in Greece? Not at all and even worse! Greece is basically using the borrowed money to pay down the interest of its debt. Supposed it could grow fast enough in the next few years so that it is financially strong and sufficiently well to be able to survive on its own. But in order to reduce its heavy debt load, it must implement stringent austerity measures by significantly cutting down spending and reducing benefits and public services etc. All of them will mean an economic recession or even depression. Just think about it. If you owe a big amount of money and at the same time your income has been significantly cut, what can you do? You fortunately find a way to borrow some money, but unfortunately with a high interest, which is only enough to pay down the debt interest (not principle). Do you think your debt problem is being resolved or getting worse? Anyone with a normal mind should easily understand the situation is getting worse. This is exactly the situation Greece is currently in. Default is not a matter of if but simply when. It is inevitable!! Don't forget, Greece is just the smallest economy among PIIGS in the Euro zone. Portugal and Italy are the likely next two countries causing financial crisis. The biggest threat is Spain, which has a size of economy bigger than the combination of the other smaller Euro countries and there is no way Spain can be bailed out if it fails but it is unfortunately facing a real possibility of failure. Greece is just the first kick of the Domino effect. That's why I'm so sure Euro is toast and it will be dissolved some day. I bet it will be within the next 5 years.

Then why Euro is still relatively strong up to now? I'm also wondering but I think I know an answer. Two main reasons: on one hand, the Wall Street is quite short sighted these days. For them 3-6 months are already a long time. What they are mostly interested is the short term interest. Since Greece is "safe" in the next few months at least, they feel good about Euro now. Who cares about its fate in the long run. On the other hand, Euro and the US dollar are almost like racing for the prize of which one is worse. One day you hear a PIIGS country is in big troubles, which will lead Euro to plummet; the next day you hear the US may not be able to raise its debt limit by Aug 2, which in turn causes the US dollar to drop. It is a kind of vicious circle, which makes Euro seem "not so bad" as compared to US$.

Now in this kind of environment, how should we better trade against Euro? For me, Euro is dead, no question about it regardless of how it may fluctuate in-between. But simply buying EUO, the inverse EFT to bet against Euro in leverage (200%), may not be the most efficient way. I started to short sell Euro about two years ago when it was at its highest level around $1.50. I sold short FXE $155 naked calls to bet that it wouldn't be able to come back again above $155. Of course it has never got back to even near $155 in the past 2 years. I made thousands on this trade. The only downside of this trade is that it requires quite a big amount of cash tied to it given the high unit price involved. So I closed the trade earlier than planned and now get into the EUO trade. Since it is an inverse ETF, what I'm doing is to sell EUO LEAP put options instead. This way, I don't need to be exactly right about its current price of Euro. Even it is up and down within certain range, I can still make  money. I'm pretty certain both the time and trend are on my side and I will make more money with this trade. Compared with the FXE trade, the capital requirement is much less with the EUO trade as its unit share price is much less (less than $20/share vs around $150/share). In other words, I can be more efficient and can make more money with the same amount of cash.