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Why the Euro Will Survive, and When You Should Buy It

Monday, 21 Nov 2011 | 2:47 PM ET

The pain of a euro zone breakup would be too great, this strategist says, and Europeans know it.

Neil Sedaka was right: breaking up is hard to do.

Chris Fernandes, vice president and forex advisor for Bank of the West, says Europeans realize this - and if they consider the history of past currency disasters, they'll see it's in their interest to keep the euro zone together.

"Look at the example of Argentina when they had to default" and devalue the currency, and then endure a run on banks, massive capital flight, and political unrest. "Despite the missteps and bickering, there is a firm commitment to the euro zone, and the euro zone will survive and stay intact," he told me. Fernandes points out that in a recent survey of Greek citizens, close to 70% wanted to stay in the euro zone, even though they were angry at the proposed reforms.

Still, Fernandes expects the turmoil to continue for some time. So even though the euro has held up surprisingly well, thanks partly to banks repatriating funds and traders' reluctance to get caught short, "there is definite downside pressure now," Fernandes says, and he's on the sidelines.

When would he move in? "I would definitely be a buyer in the 1.3150 range, given no game changing developments between now and when the European Financial Stability Fund is up and running," Fernandes says, maybe in about a month and a half.

Over to you.

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