The one group rooting most boisterously for a lower Euro has been seen buying EUR/USD today, the great German exporters. The sharp rally to 1.3725 this morning was blamed on this group as they are forced to hedge their dwindling receivables at higher exchange rates, a vicious double-whammy. As today’s German industrial production data shows (-17% y/y) shows, these guys have enough trouble on their hands without a materially stronger EUR.
If the ECB were in fact buying EUR/USD under the table in the mid-1.20s to keep a currency crisis from breaking out, they would be wise to let a good portion of them go ahead of the key area of resistance toward 1.39 or they will have a worse crisis on their hands from their strained exporters.