Ironically, the reality is that the risk-off trade has a long way to go and that will further reduce the amount of dollars available with which to purchase all assets, which in turn will generate a strongly rising dollar and weak "risk-on" trade. The funny thing about this market is that if you trade arb or correlations to lower your risk, you are ironically doing the opposite - you are increasing your risk without the reward being in proper relation to said risk. People are blowing up everywhere and I expect it to continue. I also expect that Euro longs will have a VERY tough time of it once its deleveraging is complete.
Additionally, on the fundamental side, the ECB and the troika has come up with another harebrained plan to kick the can down the road on the same variation as attempting to put out an oil fire with more oil. The Greek public stand little chance of going a long with it and, therefore, any agreements between current government officials, large banks, the EU, ECB and individual euro union members have little chance of performing, letalone being consummated - try as they might. Throw in general market structure for the debt money system and you don't get a pretty picture. The EURO is dead just as the debt currency system is dying.
On a purely technical note, I am about to get a confirmed reversal trigger on the dollar and also one on the EURO. These are usually highly reliable. So, unless the euro rallies very hard from here and the dollar falls hard from here...odds are not good for continuation of the current retracements turning into trends. To understand the reliability of these triggers, I posted about them related to a reversal in risk assets early in the week and they played out perfectly. Now, we are waiting on the dollar and the EURO.
