My Forecasts

13:40GMT Sound odd -Risky - Pound abt to go up..
13:30GMT Expecting EUR to drop..
11:30GMT Not many alerts today - all majors consolidating. Seen some volume early today but I expect more in next 20-30 mins.. a triangle formation in 1 hour charts of GBPUSD.

News:The euro has tumbled since the Greek debt crisis started to bite last December, but it looks as though the currency's long-term decline has only just begun.

Short-term accounts have already been blamed for the currency's 10% decline against the dollar over the past three months, with signs of record-breaking negative bets among some investors sparking suspicions of a speculative raid.

Other types of investors are feeling the heat too, with the U.S. Justice Department launching an investigation into whether certain hedge funds may have banded together to push the currency down.

However, a much weightier group of long-term investors has yet to start selling in bulk. Some commentators are now warning against complacency, stressing that the big wave of euro selling from longer-term accounts such as central banks and pension funds is still in its early stages. Particularly if German bonds come under pressure, a further 10% drop could well be just around the corner.

"The big issue is that pension funds, life insurance companies and central banks may de-rate their opinions of the euro, just as they de-rated their views on the dollar from 2002 to 2008," said Stephen Jen, a currencies specialist at hedge fund BlueGold Capital in London.

"We are dealing with a crisis situation where the political seed could have been sown for an eventual breakup of the European Monetary Union... In my view, an expanding universe of euro sellers will likely help power a protracted downtrend in the euro against the dollar," he said. Watch out for the euro to slide to $1.20, he added.

The budget crisis in euro member Greece and the potential that the European Union may need to bend the currency membership rules to bail it out have already attracted enthusiastic euro sellers.

Non-commercial, or speculative, traders on the Chicago Mercantile Exchange have already built up negative bets on the euro on a record-breaking scale, generating an aggregate negative position of around $9 billion, according to weekly data that the CME provides to the Commodity Futures Trading Commission.

Many analysts now think that with negative bets running at all-time extremes, the momentum for euro sales may wane. As some traders lock in profits on successful bets and close their positions, the euro could climb somewhat. Indeed, these pressures may account for the currency's recovery from its nine-month low of $1.3434 reached earlier in March to just under $1.37 Thursday. This recovery may have further to run. However, it clouds the bigger picture.

The CME numbers are scrutinized weekly because they are taken as a rough proxy for hedge-fund flows as a whole. Still, at around $9 billion, these positions are a tiny fraction of the total currencies business, which accounts for at least $3 trillion in flows each day.

"The data are interesting, but this is a sideshow," said Simon Derrick, a senior currencies analyst at The Bank of New York Mellon in London.

On a much bigger scale, around one-third of the enormous $7.5 trillion held in reserves by central banks around the world is denominated in euros, Derrick said.

Central banks are generally thought to follow a similar investment strategy to other long-term investors, and judging by the $13 trillion held by The Bank of New York's custody clients, it is clear that euros still make up a large share, Derrick said.

"Investors have been reducing their holdings of Greek and Italian debt, but relative to where they were in 2000, their overall holdings are much higher," said Derrick.

Moreover, while investors have trimmed their holdings of debt from the riskier euro-zone nations, they have boosted their holdings of German bonds, staying in euros and effectively using German government bonds, or bunds, as a European safe-haven.

That makes the near-term fate of bunds crucial, and here, the outlook is finely balanced.

Price movements so far show no sign of a pullback yet, but investors may start to shy away from German assets for fear of the liabilities that Germany may undertake.

In addition, if Germany offers some form of guarantee to Greek debt, then German bonds could suffer outflows as investors flock to higher-yielding Greek debt with a German safety net.

To make matters worse, if other struggling euro nations approach Germany for help, and Germany offers yet more guarantees, then the quality of German government debt could be seriously polluted. Rather than shifting from the bonds of one euro-zone nation to another, many investors may exit the currency bloc altogether, the theory goes.

"We can no longer make our judgments about German paper simply on the prudence of the German finance ministry. Instead, we must also now factor in the finances of the nations whose debt they may end up guaranteeing," Derrick said.

Like Jen at BlueGold, Derrick said he suspects that a move down for the euro to $1.15 to $1.20 is a clear possibility. "If you take away the reserve currency premium, that that's the long-run average," he said. "Why can't it be there?"