The euro "should" be on the rocks for real reasons

!! Outlook !!
The euro "should" be on the rocks for real reasons, not least that
ad hoc fixes to postpone disaster point to a lack of resolve and
cohesion among eurozone leaders. It's not enough to say Germany
refuses to pay for others' mistakes and misfortunes. Europe refuses
to admit that the golden rule of fiscal excellence, which has only the
carrot of eurozone membership and no sticks—has failed. Greece will
have to restructure or leave the eurozone. This is what experts have
told us all along—that there is no way to make Greek debt
sustainable. On Friday Fitch downgraded Greece to BB+, which is junk
and joining Moody's and S&P with that judgment.

Another reason the euro "should" fall is technical. The euro hit a
high on Dec 14 at 1.3497 and failed to match-and-surpass on Jan 14,
reaching only 1.3457. We can draw—and so can everyone else—a
resistance line between those two points that lands at about 1.3400
today. Failure to surpass the sloping resistance line and the previous
high levels tells traders "if you can't buy it, sell it".

That raises the interesting question of where a drop might end, if
drop is what we get. The linear regression of the big downmove from
Dec 14 intersects with the last big low, 1.2588 from Aug 24, at around
Feb 18. Channels built around linear regressions are actually fairly
reliable in naming support and resistance. That doesn't mean we will
not see euro buying on dips, the recent market behavior of the bulls.
In fact, that's what we expect after the Eurogroup meeting tomorrow,
when everyone will come out and speak glowingly about progress. But we
smell that the market really wants Greece to default or leave the
eurozone, and also that a fall of the Irish government (and change in
the bank bailout there) is not out of the question. Tension will not
go away easily.

Meanwhile, China is going to make the dollar bulls miserable with
louder and more frequent mention of diversification of reserves. We
say Washington should tell China it doesn't care but Washington is
no match for the game-playing abilities of the Chinese, so this will
probably end in tears.
Source: Fxstreet.com