There is enough in the EU Statement so far to keep those short the EUR/USD anxious and those long the EUR/USD feeling supported. While the market wants numbers, as of today the EU is unable to provide them. The tough part for the market is deciding what to do. Do you sell EUR/USD today on there being a lack of actual numbers? Only to be stopped out in a few days when the numbers are finally provided?
We continue to like being long the EUR/USD, and with a market biased on the pessimistic side, we feel comfortable with our view. There is a tremendous shift happening in Europe. Before today Europe was referred to as the Old World, and the U.S. the New World. The discussions that have occurred in Europe over the past few weeks are momentous and historical in that they have laid Europe's problems bare. Europe has had to acknowledge these issues and is now acting in the correct way to fix them. They are fixing them by writing down assets, recapitalizing banks and bringing forward austerity measures to reduce budget deficits. Europe is becoming the New World, while the U.S. drifts to the Old World.
For the Reserve Manager this action stands in stark contrast to the U.S., where so far the solution to longer term fiscal issues and short term economic issues has been to spend more and Quantitative Easing (print money). The ECB has refused to be pulled into quantitative easing and currency debasement and this will be rewarded by the market. The EUR/USD is likely to trend higher as U.S. fiscal issues are seen to be growing while European issues are being addressed.