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Why the Euro's Rise Will Resume

Thursday, 31 Jan 2013 | 2:32 PM ET

With downbeat retail sales data combining with a sizable fourth quarter loss at Deutsche Bank to take the euro down a peg from a 14-month high, some traders are asking whether the common currency's bullish run is over.

Not at all, says Kathy Lien.

Lien, a managing director at BK Asset Management and a CNBC contributor, told CNBC's Melissa Lee that the bout of weakness is just that - a brief interruption in a longer upward trend.

"The decline that we've seen in the euro-dollar today is very, very small," she says. "If anything, you can look at this opportunity in the euro-dollar to actually pick up some bargains."

Money In Motion: Trading the Euro Trend
A currency play on the falling euro, with Kathy Lien, BK Asset Management.

Lien says a variety of factors - capital flowing back into the euro zone, mostly positive economic reports from Germany, the European Central Bank's apparent comfort with a strong currency - are all combining to support the euro.

"Don't be confused by this temporary dip," she says. "I think it's nothing but that at this point."

The question for traders, then, is whether to go bargain hunting now, or wait for the euro to break out in its next round of strengthening.

Lien recommends the breakout approach. She wants to wait until the euro reaches 1.3600, and then buy it against the dollar, setting a stop at 1.3500 and a target of 1.3775.

Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class.

Talk back: Tell us what you want to hear about - email us at moneyinmotion@cnbc.com.

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