The market is now well and truly over the euphoria which greeted the EBC’s bond purchase scheme. It also didn’t murder the dollar when QE3 was announced.

The global economy is struggling and there are fewer and fewer bright-spots for the market to focus upon. The Aud, the darling of the risk on brigade has given way to the JPY, the darling of the risk off brigade! We can’t consider the Chf anymore as it is heavily shackled by the SNB.

Now it appears as though the Euro (the darling of no one it seems) has topped out as the market continues to digest the European leader’s ability to pass up every opportunity they manufacture to set their joint economy on the right track.

It is difficult to imagine that it can possibly be a positive event when the fourth largest economy in the Eurozone asks for a bailout. It seems that until Spain go cap in hand to Brussels or Frankfurt or indeed Washington the Euro will continue to suffer.

But what happens after Spain receives bailout (and that will happen only if their bonds blow out to over 6% again)? Greece continues to be on the back burner but one of these days its will explode into life again. Italy needs to continue and step up its reforms. The French economy now appears in recession and there are continued rumblings in Germany that they didn’t really mean that they found the bailouts legal as they seemingly forgot to add a few clauses making the whole thing unworkable.

So, has the downtrend for the single currency resumed? Despite the problems of the U.S economy and QE3 demonstrates them very well, they are not on the point of breakup and the dollar will continue to be the safe haven currency of the world. Well certainly until China decides otherwise.

My technical friends (I do have some) tell me that lower highs mean a trend is/has formed and the failure to break 1.3220 resistance means that now a top is in place.

Some of you will recall Alan Greeenspan’s famous quote about irrational exuberance! Wikipedia comments that this has come to mean that a market is overvalued. I share his Christian name but very little else. However, I would certainly use those two words to describe the Euro’s move in the period immediately following the events of a couple of weeks ago.

If the U.S. economy starts to perform in any way at all then there is no reason we cannot see the Euro test the level at which it came into being and then parity. Of course any major internal issue within the Eurozone will speed the process considerably.

Those who say that a Spanish bailout would be positive are presumably the same ones saying a Greek departure would also be beneficial. I think Frau Merkel, Sr Draghi, Herr Junker M. Rompoy etc. are all beginning to feel somewhat different