By Chuck Butler, Editor
www.worldcurrencywatch.com

It looks like the euro is destined to suffer for the time being.

This time, you can blame the euro’s suffering on the rot on the vine in the Eastern European countries. These Eastern European countries are taking on water from bad loans, or loans gone bad. And of course, you know who the lender of last resort is on these loans don't you? Yes, Eurozone banks. This opens a whole new can of worms folks...

The euro has already taken hits from Spain, Italy and Italy in this round. Previously, the euro also took a major hit from France in 2005. Yet, the euro survived them all. And it will survive this round... But not until it sees more weakness vs. the dollar.

I would look for the euro to revisit its previous low of a few months ago in the 1.23 handle. This could get ugly, as this Eastern European bad loans scenario has just popped up, and we've got to work through all the rubble to get to a base, before the euro can come back even stronger.

This will obviously represent some cheaper levels to buy, and diversify into foreign currencies as the euro drops. (EDITOR’S NOTE: Click here for one all-encompassing investment strategy that gives you access to all the truly beaten down currencies.)

So, the Big Dog, euro getting taken to the woodshed for its indiscretions with Eastern European loans. But remember I’ve told you before that European bank losses are nothing compared to those in the United States. My friend, John Mauldin, said that they "Dwarf those in the U.S."

And, remember, the Eurozone began this meltdown in a position of strength. The U.S. was on its knees begging for foreign investment to finance their IOU's when this mess started.