The EUR has fallen 10% vs. the dollar in 4-month’s and is now contained in this narrow monthly range. Is this the fair value of the EUR? It’s lost 5% this year over European sovereign debt problems and the possibility that Trichet will fall behind Bernanke in hiking rates. The contagion scenario, referring to Spain and Portugal, has traders leaning left of center in their EUR positions. However, the record ‘short’ bets are in danger of feeling a ‘whiplash effect’. A natural healthy cleansing of the ‘weaker shorts’ is on the horizon.