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How to Play the European Central Bank Meeting

Tuesday, 5 Mar 2013 | 3:30 PM ET
Mario Draghi
Getty Images
Mario Draghi

The euro zone PMI report was a happy surprise today, but the euro zone economy is still contracting - and investors are decidedly edgy about the euro.

Is the worst still ahead for the common currency?

"I still like selling it - you've just got to pick a level to get involved," says Andrew Busch, publisher of andrewbusch.com.

Euro Down 4% In a Month
The FMHR traders discuss how to play Apple, First Solar, and other stocks requested on Twitter; and the euro is stabilizing today after the revised European PMI number came in slightly above its initial reading. Andy Busch of The Busch Update, offers insight.

The key, Busch says, is the European Central Bank meeting coming up on Thursday.

There are hints the bank may intervene to buy Portuguese bonds, he told CNBC's Scott Wapner, and prices of those securities are rising.

But for the euro, "I also think there may be a rate cut, so I want to keep selling it until that meeting."

For that short-term trade, Busch recommends selling the euro against the dollar at 1.3075, setting a stop at 1.3125 and a target of 1.2925, for a three-to-one risk-reward ratio.

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.

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