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Adding (Yet Again!) to My Short Position in the Euro Tomorrow, as soon as the currency markets are back in trade, I plan to add significantly to my short position in the Euro. The Euro recently shot up to over $1.28 against the US Dollar--a 2 cent move in just a matter of days on the hope that the Euro would be able to solve its debt problem with more debt. Adding fuel to the fire is the prospect that the US will be engaging in its own quantitative easing program fairly soon. The bottom line reason that I continue to favor the Dollar over the Euro is simply the fact that the Euro region's debt problems are a little bigger (relative to their collective GDP) than ours and they happen to have a larger percentage of shorter-term debt that is coming due and that will likely cause the Euro to engage in a larger devaluation of their currency than ours to avoid a collapse of their banking system. 

I believe these Euro rallies to be classic cases of "buy the rumor and sell the news", and plan to continue to scale into short positions that take advantage of these temporarily higher prices. I have and keep plenty of dry powder to take advantage of even higher prices should the Euro continue to rally from this level.

Please keep in mind that currency trading involves a lot of leverage and thus, a lot of risk.
Written By: Joshua Ungerecht

Currencies, Currency Trading, ECB, Euro, European Central Bank, Forex Trading, US Dollar