However, while a political compromise might be closer, the European Monetary Union still has many issues that will need to be ironed out regardless of any achievements over the next few months.

These issues mean that regardless of any short term moves higher in the Euro, 2012 looks to offer significant opportunities as the Eurozone works out its ramifi cations of the European debt crisis.

Ever-closer integration?

We have said for a long time that the eventual resolution of the crisis – and note that we say resolution not solution – will be greater integration of European nations’ fi nancial positions.

This has long been the most obvious weakness of the Euro. In fact, when the idea of a single currency was first mooted in the late 1980s and early 1990s, many analysts warned it would be unworkable because of the different levels of economic activity and gulf in budget discipline between northern and southern Europe. This has come to pass over the last few years. Most importantly, the sudden reduction in debt costs on entry into the Eurozone allowed countries like Ireland, Portugal, Greece and Italy to go on a massive government-led spending spree.

However, as economic conditions worsened, suddenly governments saw a sharp fall in tax revenue meaning they were no longer able to handle their debt repayments. Of course, this isn’t the fi rst time this has happened. Governments get themselves in financial trouble all the time. But usually, there are two easy solutions. One solution is two devalue your currency Suddenly, you have far less debt to pay back. Secondly, you could just print money and pay back your debt with freshly minted cash.

Lender of last resort

These two strategies aren’t available to Eurozone countries and that’s why we’re in the trouble we are in now!

The Eurozone means all countries have to suddenly want to devalue the currency – an unlikely outcome – while printing money is currently seen as unacceptable.

But the current situation in global markets means that if France and Germany want to Euro to continue to exist – and they do – then they have to make some compromises.

These compromises are likely to take place but it means that Germany and France, through the EU system and the European Central Bank, will now take greater control of other governments’ budgets. And desperate governments, like Greece, Italy and the others, are currently willing to agree to anything.

The European Central Bank is likely to become an even more important player over the few years. Most importantly, it will see the Eurozone becoming more like the USA, with a centralised financial system and central bank willing to act a lot more aggressively.

Open up the printing presses

So, if we want to understand want might happen to the Euro over the next few years, it makes sense to look at what the US has done to handle its own debt crisis since the onset of the GFC.

If you’ve been paying attention, you know where we are heading. The US government has fi red up the printing press in two massive programs of what is called quantitative easing. The US has printed money by the bucket load to help devalue its currency and boost asset prices. The UK has operated a similar program.

This means that if the EU finally finds a resolution to its problems we are likely to see the Euro plunge in value over the next few years.

But in a rare occurrence for traders and investors, if the EU doesn’t work out a solution to the debt crisis, this is likely to result in the Euro falling as well.

Therefore, as we enter 2012, once of the most intriguing investment ideas is to look for way to benefit from the falling Euro.

To find out more about the exciting world of gold, silver, oil and currency trading, why not register for a free workshop with ForexCT? Find out more on our website at www.forexct.com.au or call us on 1800 367 392.