Euro falls sharply, reaches lowest level since February

UPDATE: To get a sense of how dramatic a move this is, click here and look for the Sept 9 bar. (If you're clicking on Sept 9, it will be the last one.) The euro hasn't been below $1.41 in a while.
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I normally don't write about currency moves, especially one-day moves. But the drop in the euro in September has been striking. Before Labor Day, the euro was holding at about $1.44 and trading in a fairly narrow range.

It has since fallen sharply, breaking through a key support level in the process. As I write the euro is $1.36 and change, having fallen $.03 just today. The euro hasn't been $1.36 since last February.

Things are seriously in trouble in Euro-land. Is this a market overshoot (and thus a buy opportunity)? Markets do overshoot; sometimes the turbulent times are best times to buy (into deep drops) or sell (into surges).

How about now? This may be the shakiest the euro-project has looked since its founding (with still plenty of room on the downside).

This article from Reuters will get you started. And here's from the WSJ.

At the moment it's all about the bonds — guarantees designed to make sure that the weak economies make all lending bankers whole (i.e., not default on their banker-held debts). In other words, it's once more all about keeping bankers in business. And there as here, the bankers are fully in charge.

At some point, something will give way, either here or there. Currency traders are betting that trouble will go there first. Stay tuned.

GP