Time to short Euro again

Long time readers certainly know that I have been bearish for Euro for years (see here and here). I even made a bold prediction that Euro would not survive in 5 years. Of course Euro would have already clasped if purely based the economic terms. It can rather survive for so long simply because of the political will. Following the financial crisis in 2008, the Eurozone countries have tried very hard to get back on foot. Yes, their situations are not as abysmal as 5 years ago, but have they really come out of the woods? No way! The Eurozone is still in a mess, a bit mess economically, period! Our recent bottom line blog was touching some key structural problem in the Eurozone.  While they are still struggling to survive, they are pulled into the confrontation with Russia due to the Ukraine crisis. Put geopolitics aside, sanctions against Russia are also hurting EU themselves very much economically. This has become more than evident when German’s GDP data showed that they were going into recession last quarter. You have to understand Germany is the only economic engine in EU that keeps the whole Eurozone floating. If they cannot keep their head above the water, the whole Eurozone has nowhere to go but sink. So what is the prescription from the EU Central Bank to save their economy? You can guess: printing money and flooding the market with Euro as much as needed! In other words, Quantitative easing in EU is escalating on four cylinders. The net result of QE? A weakening Euro. As I have said before, the EU Central Bank will not allow Euro to strengthen too much as they don’t have the economic power to support that. This is exactly what has happened in the past few months: Euro strengthened to $1.40 or so but could not stay that strong and has plunged to $1.33 just in the last couple of weeks. This is just the beginning. Euro has much more to drop and I won’t be surprised to see it go down to $1.20 or even lower. I think it is a safe bet to short Euro now. The easiest way to do so is to buy EUO, a leveraged inverse ETF against Euro.