Just when you thought the dollar was headed north, along comes a downbeat economic report to monkey up the works.
Consumer sentiment unexpectedly plummeted in March, as Americans grew dissatisfied with the gridlock in Washington and skeptical about major improvements in the labor market or the overall economy. And the dollar, which has started to trade in the same direction as stocks, took a hit, especially against the euro.
The move is leading Boris Schlossberg, a managing director at BK Asset Management, to give the euro another look, and he likes what he sees.
Schlossberg points out that the dollar failed to rally on positive employment news released Thursday, which is often a telltale sign that an uptrend is over. In terms of specific currency pairs, "we certainly are definitely in a period of correction against the euro," he told CNBC's Scott Wapner. The euro, he says, "has had everything but the kitchen sink thrown at it and has been able to hold the 1.2900 level pretty well." Right now, he says, "it seems to be recovering as we speak."
The driver for euro strengthening, Schlossberg says, is a sense that European leaders may be shifting their focus toward stimulus. "European leaders are finally starting to talk about prosperity and not austerity,"he says. And if economic reports due next week are positive, "we have a reason to think that the euro may bounce."
Schlossberg wants to buy the euro if it rebounds to 1.3150, setting a stop at 1.3000 and a target of 1.3300, on the theory that recovery could be underway.
If the euro fails to rise to the entry point, no harm done, he says. But "there is a possibility here that we could have a longer rebound in the euro than most people think."
You can hear the discussion in the video, starting at 4:29.
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