One of the comments this morning was complaining how everyone was getting so bearish on the EUR, speculating against it and driving it lower, thus perhaps exacerbating or compounding the EZ problems.

This is an unfortunate side of the FX market, we do tend to all gang up against one currency and our only reason for doing so is to try and make some money. It certainly doesn’t sound like a particularly noble calling when put like that, but the financial markets are a necessary and vital part of the entire global economy and we vultures are part of the eco-system.

That said, vultures do also get caught in traps and the strong statements overnight from Merkel and Sarkozy as well as strong support from the US and China, will have some bears getting worried. The hedge fund and CTA community have been piling into this bear EUR story and of course they’ll talk it down as much as they can. But if everyone’s short already and the bad news stops, then there will inevitably be short-covering rallies.