The Eurozone is treating the symptoms of Ireland, Spain, Portugal, Italy and Greece’s lack of competitiveness, but not the causes. This argues that the narrowing of credit spreads between these countries and Germany is unlikely to persist for very long without further action by the European leaders.The more the European currencies rise into the high expected on Tuesday the more aggressive the next leg of the downmove will prove. The impact of bad US employment data was largely ignored by the US equity market. It won’t power the euro higher. We expect the EUR/USD to peak around 1.3470 (38.2% retracement from high in early November to the low last week). It should then turn lower and decline into the days surrounding the Christmas holiday. Provided 1.3470 holds on a closing basis the euro can still fall to new lows around 1.2625 around the end of the year.