Excessive hopes for radical action during last week's EU summit have given the markets a nasty hangover this week -- compounded by procrastination by Bernanke as he waits on the ability for the re-jiggered FOMC to deliver unanimously supported QE expansion come 2012.
The euro at $1.30 is badly oversold and at major support on the 2-year chart and is well set-up for a counter-trend rally into year end -- despite the protestations of WSJ readers.
However, an extraordinary amount of euro denominated debt is due for rollover in the Feb-Apr 2012 timeframe. EU sovereign funding requirements by end of April 2012 : Italy 157.4 billion euros, Spain 63.4B, France 177.8B.
The EU governing bodies strike me as too non-congruent, internally political, bureaucratic, bound by excessive legalities, and overly influenced by key EU member leaders and their electoral politics to proactively tackle the accelerating debt rollovers.
It's management by crisis in spades and it's becoming difficult to imagine this cast of characters ever following the 2008 Fed/Treasury playbook.
The euro could well be headed for a re-test of its June 2010 lows of $1.20 in the early part of next year.
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