Judgment Day Near For EUR/USD, SocGen and French CDSs Widen (AAA Rating a Risk)

EUR/USD Judgment Day

Judgment day is near for EUR/USD. It is currently down 1.25% at 1.41699 and inside an important symmetrical triangle. The pair is in a tug of war between slowing economic growth, the sovereign debt crisis in Europe and the recent downgrade of U.S.'s credit rating. France's AAA credit rating is now a worry, which is why Societe Generale (SOGN.PA) is down 14% at $22.18 and its credit default swap (cost to insure its debt) widened 24% earlier today. Also this is interesting: "French CDS Are Where Italian CDS Were In July" (chart at Business Insider). The French CDS quote is at Bloomberg.

SocGen's stock has been trending down for a while now and I don't see support until the March 2009 low ($17.40). SocGen's CEO was on CNBC earlier today, I embedded the video after the jump. More on French bank CDS action at Reuters:

EUR/USD 2 year (freestockcharts)

"BNP Paribas , Societe Generale and Credit Agricole CIB's credit default swaps widened sharply on Wednesday amid fears that France could soon lose its triple-A credit rating.

By 1510 GMT BNP Paribas' five-year CDS had widened 35 bps to 246 bps, Societe Generale's CDS was 65 bps wider at 334 bps while Credit Agricole CIB's CDS had widened 23.5 bps to 265 bps, according to Markit data." (Reuters)

John Taylor, who runs the $8 billion currency hedge fund FX Concepts, told BloombergTV on August 2 that he believes the Euro is going to 1.25 next!

CEO of Societe Generale on CNBC this morning: