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It was late July when Draghi said he would do "whatever it takes" to preserve the euro. This included bond buying from those countries that requested help. Tomorrow, the ECB holds another meeting, this time on the road at Ljubljana, Slovenia.

To date, Spain -- the next needy debtor country expected to seek relief -- has failed to do so. Could it be that PM Rajoy, having observed the results of the German-inspired troika's austerity plan in Greece, is unwilling to surrender to the elites and technocrats in the North?

There might be another benefit to Spain's tardy response to the ECB offer. Last week, the French government revealed what france24 labeled as a "tax and slash 2013 budget." Some of the plans:

The French government revealed a tough 2013 budget on Friday that seeks to tackle a €37 billion deficit with tax rises and deep spending cuts as unemployment tops three million and the economy teeters on the brink of recession... The budget breakdown indicated that France needs to make 36.9 billion euros ($48 billion) in savings if it is to meet its target of reducing its budget deficit from an anticipated level of 4.5 percent of GDP this year to the EU ceiling of three percent in 2013.

The total of 36.9 billion of savings includes 12.5 billion of cuts -- 2.5 billion on health spending and 10 billion across other government departments. A total of 10 billion will come from extra taxes on individuals and a further 10 billion from new taxes on businesses. These are in addition to 4.4 billion worth of new taxes announced in July.

With such a plan, does anyone really think that the French economy in not quickly headed for disaster? Needless to say, Hollande's popularity is in a free fall, and with his leadership, France will soon be the new candidate for membership in the Club Med. There he can side with Rajoy, letting Merkel and friends clean up the mess.

Markets, especially ones highly leveraged like currencies, are impatient. Perhaps the future Hollande-Rajoy alliance is not currently relevant. What has been important to currency and equity markets has been the mere rumor of imminent bond buying by the ECB. These rumors are not new, and the bullish impact may be waning.

Another impediment to the bond buying -- regarded as a shot of liquidity for euro and equity bulls -- may be the objections of the Bundesbank. This may contain Draghi's attempt to expand the ECB's balance sheet.

With the European economies slipping into a recession, the case can be made for reducing the bank rate from the current .75%, but few economists think this will happen at this meeting.

Recent ECB meetings have given the euro a boost, but it seems much of this may have been short covering. According to our Commitment of Trader Reports, speculators were short 256,470 euro futures contracts on June 5, 2012, compared to a short of only 66,908 contracts in the most recent report. Further, the total USD position versus all the currencies we cover is now short over 267K contracts. On June 5, the total USD long was 430,179 contracts. In June, there were euro shorts to be covered. Now the market is loaded with USD shorts, mostly against the commodity currencies, but they are still shorts.

Looking at the EURUSD chart, there has been a bearish cross over on the MACD. The 1.3160 swing twin top remains in place, as does the 200 day SMA support at about 1.2822. (EURUSD), (NYSEARCA:FXE), (NYSEARCA:UUP). We will be watching for a breakout from either the support or resistance, and we will respect the trend, but we prefer the short side of the euro.

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Source: When Will The ECB Bond Buying Commence?