The Single currency of 16 European countries and the second world currency, the Euro is trading with record short positions. The fear of another recession is strong as this time it is not the companies, but the Governments at risk of defaulting.

The sovereign debt crisis has spread from Greece to Spain & Portugal, and is threatening other countries like Ireland, Italy, UK etc

The German Regulators have banned naked short selling of certain securities and debt. There have been various packages doled out , many statements made by officials in US, Europe and IMF …Agencies have been downgrading the countries and assets in Europe. The feeling is that all the plans are not well thought out and are half baked and are uncoordinated. And the result more ‘ Euro selling’

The currency started the year with 1.43 and has seen lows at 1.21 Vs the Dollar, making 4 yr lows Vs USD, 8 yr lows Vs China yuan and all time low Vs Swiss Franc, And is trading negative Vs many other currencies as well for the current year.

The talks about Euro being at parity to dollar are fast catching up. Also being talked about are the problems with the currency itself. The Euro is not just a currency for 16 nations , it also represents the state of economy for these countries , as all other currencies represent. And that is where the problem is , because while all these European countries have their own budgets and deficits and growth rates and trades , they still have one currency to show for themselves The Euro.

So where is the currency headed.

If you look at the trade part of it./ the currency has been oversold and the short positions are at record high..so any good new out of Europe will have many buyers for the euro , giving them chance to cover their positions, or creating new buys as it has been hit hard , giving opportunity for knee jerk reactions.

On the medium term to long term basis though the europe concerns are far from over. The country is coming up with bailout packages at a time when most other developing and developed nations are withdrawing them. So the problem in Europe is expected to stay for longer and recovery slower and delayed.