Don't be too complacent with Euro

Long time readers of my blog certainly know that I'm a perpetual Euro "disparager", since I really don't think Euro will work in the current format. In the past several years, I shorted Euro several times and made some good money from it. The latest one I talked about it  was in Aug 2012, for which by the way I had held it till expiration and got the full profit. I know Euro won't disappear overnight and it will fight back along the way. Actually I like the way it behaviors that from time to time it will bounce back. This way, I can make more free money from it. I think the time is coming again and close. Euro has appreciated against US$ quite significantly in the past few months and has been up as high as $1.35 lately. Euro lovers get really excited now as they think Euro has survived the worst crisis and it is now rebirthed. Really? Let's look at a few statistics:

- According to the World Economic Outlook by the International Monetary Fund (IMF), they have changed its 2013 forecast for the Eurozone from growth of 0.1% to a contraction of 0.2%. The Eurozone economy contracted 0.4% in 2012.
- As we all know, Eurozone countries have instituted many crippling austerity programs, which are supposed to bring down the government debt for those countries. But government debt in the Eurozone countries actually rose over the past year from 86.8% of gross domestic product (GDP) to 89.9% of GDP.
- Understandably, with all the harsh austerity programs, unemployment in the Eurozone is very high and has reached record highs. Eurostat figures released earlier this month showed November Eurozone unemployment at 11.8%, with the actual number of unemployed rising by 2 million from a year earlier.
- Worse and more alarming is the unemployment in several of the troubled nations: Portugal's rate was 16.3%, Greece's was 26%, and Spain's was 26.6% - all significantly higher than a year ago.
- It is more desperate when one looking at the youth unemployment figures - 56.5% in Spain, 57.6% in Greece and 37.1% in Italy

Do these figures look like a healthy recovery ongoing in the Eurozone? I thought it is a no-brainer No! While I believe and have said for years that Euro will fail eventually and disappear with its current format, it is certainly not a straight line downward. I guess there is no surprise that for anything, there are always believers vs disbelievers. In the investment world, one important factor to be successful is to side with the minority, believe or not. Right now, the Euro believers seem to be on the winning side, which is pushing it upward. I’m happy to see this as this means more free money is coming my way. For any currency, when a trend starts, it usually takes some time before it turns. I don’t think Euro has exhausted its energy yet to go up and there is chance it may go as high as $1.40 in the next few months. But mark my words: Euro will come down and hard. The higher it goes, the harder it will plunge. In addition to the natural life of Euro to go down, there is also the artificial force behind to push it down. We have already seen the nervousness the Eurozone leaders have shown when they see the strengthening of Euro: The ECB president Draghi and the French president Hollande have already tried to talk down the Euro. If Euro continues to go up, they will for sure start to do things to bring it down, just like what Japan is doing for the Japanese yen.

So I’m patiently waiting on the sidelines and get myself ready to pick up the free money when the moment comes. EUO, the inverse EFT for Euro is the one I will likely to use again. If you are really an aggressive trader, you can even think about getting long with Euro to get on board with its short term uptrend for now and then short Euro for its inevitable downtrend.