Gartman Predicts Abyss for the Euro

Warning of rough times ahead, the Gartman letter predicts that if the euro/yen exchange rate falls under 109.75 yen per euro, the euro is effectively doomed.

"We shall strongly urge everyone...even those who think they've no exposure to the currency market, to watch the Yen/EUR cross today, for if 110 is 'given' in size, the last bit of support shall be 109.75, made during the madness of mid-week last week. Below that lies oblivion. Below that is the abyss."

This was the colorful language coming from the Gartman letter this morning, citing a mathematical model of the Yen/EUR cross that has been historically been an accurate gauge of currency movements. He lambasts the lack of concern among both EU governments and people, who appear not only unmoved, but also may "relish the notion of a weaker EUR, believing as the textbooks argue that the weaker currency will increase exports from the rest of the world while reducing imports." The problem with this logic, Gartman asserts, is that "trade flows are dwarfed by investment flows, and investment flows are damaged by the psychology of a steadily weakening currency.