Grexit and the euro

I was just asked by a sell-side friend what the probability of a Grexit in the near term was and what would happen to the euro. This was my answer:

Impossible to say when they go. Odds have to be they get a deal, but these odds have diminished with each round. My guess would be big squeeze in euro shorts were it to happen, just because of the heavy short euro positioning. Note how the increased concern over Grexit hit Eurostoxx hard (also heavily positioned) but the euro stayed bid.

We would then reverse-engineer the story “the euro is now stronger without Greece” to fit the price action. Once the squeeze is over, we would start worrying about other peripherals. Europe would have to come out with a raft of foaming-the-runway measures. They have to have some of these planned; though I can’t claim to know what they are.