EUR/USD:

Traders ask me all the time, "when will the euro drop, why won't the euro drop, what's keeping the euro so supported..." Well, for now it's the EUR/USD's strong correlation to the equities markets and what's happening with the yen crosses, and the battle being waged in the EUR/GBP market that is smacking it around. The EUR/USD has no legs of it's own to stand on and there's really not much rhyme or reason for the moves it's making on a daily basis.

Sometimes I really hate the euro, especially when we get the type of data we've had today... we learned Eurozone GDP dropped by 1.6% in Q4 which was more than expected and the worst decline in 13-years. Household spending dropped 0.3% while Eurozone investment sank a staggering 4%. Eurozone exports are down 6.7%.

How the euro can even be above 1.3000 is a total mystery to me, it makes no logical or fundamental sense, but again, the EUR/USD is tied directly into the S&P 500, and when equities are hot, the euro is hot. Will it change? I don't know, I can't predict that, but I think at some point market participants have to come to their sense and destroy the euro.

It's my opinion that ECB interest rates must come lower and they will have to at least begin buying corporate-sector debt and possibly government debt if they can get the laws changed to do so. ECB Quaden said: