From the September 01, 2012 issue of Futures Magazine • Subscribe!

All eyes on euro’s slow-motion train wreck

The struggling euro currency, the sovereign debt issues of Europe and the growing European economic recession with the implications those developments present to economies throughout the rest of the world continue to confront currency traders more than three years after they first emerged. 

Despite a flurry of activity ahead of a European Central Bank (ECB) meeting in early August and promises to do everything possible to save the euro made by ECB President Mario Draghi, foreign exchange traders and analysts were left with the conclusion that little had changed in the slowly unfolding Eurozone drama. 

“The central bank ultimately has run into a pushing-on-string type scenario whereby they can do all the QE (quantitative easing) and all the monetary easing they want, but at the end of the day these problems have to be addressed in some way, shape or form. That’s probably going to involve pain,” says Dave Floyd, head of market strategy for the Aspen Group. “That’s what everybody wants to avoid, and that’s understandable, but it’s probably going to take a while for this thing to unfold and it’s probably going to be like a slow train wreck rather than some sort of sharp, drastic event. Most of the potential scenarios that could happen are known at this point. It’s that wild card that nobody sees coming.”

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