The Advisor Weblog

Posted: 15 Nov 2011 06:30 AM PST

Fears continue spreading all over the euro zone, as the differential in between Spain and German yields reached the widest since 1995. Europe has taken too long to pay attention to the debt issues and now will pay the consequences. In the meantime, new Prime Ministers are having a hard time just starting: Greek Lucas Papademos has Samaras, the opposition leader that would not sign the written pledge the EU requires before releasing the next trance of aid, while Italian Mario Monti, is facing resistance on forming a cabinet. Investors remain wary on their ability to bring sweeping reforms to their nations.

Lets remind a small detail refreshed early Monday by a German magazine: the German government has been preparing for an early exit of Greece from the euro zone. The talk is around since a couple of months ago. But if one leaves, what will halt the other troubled countries from doing the same? And then, which will be the consequences for the euro. Honestly, I believe is also late for that. If debt contagion has made euro lost over 800 pips in a couple weeks, can you imagine the domino effect of countries leaving the area? That will be the end of Germany, and I don't think they can afford it. They will gave up on their constant demands of austerity to troubled sooner than later.

And the world rolls around the euro zone: risk aversion leads markets today, with local share markets in red and US futures set to an open lower. Some corrective movements are now being seen, yet again, I would be considering rises as selling opportunities.

Here is the short term outlook for the American session:

http://www.fxstreet.com/technical/analysis-reports/currency-majors-technical-perspective/2011/11/15/02/

Have a great trading day!