Dennis Gartman: I’m on the Wrong Side of Euro Trade

Earlier this week, strategic investor Dennis Gartman made the case for going long euro, betting it would not fall below $134. Wednesday, he updated that view.

“The long-term fundamentals, the long-term trend was clearly, inexorably downward for the year,” he said. “I tried punting from the long side — wrong.”

A disastrous German bond auctionand word that France might lose its AAA credit rating contributed to downward pressure on the euro.

“That was a very disappointing auction, and it doesn’t bode well for the future,” Gartman said. “You always expect a German auction to go extraordinarily well. All of a sudden, you have to say, ‘Whoops, sorry. That doesn’t work, either.’”

(Related Story: Euro on ‘Death Watch’ After Investors Spurn German Bonds)

Gartman said the smart move was toward gold, which rose in early trading.

German Chancellor Angela Merkel might have no choice but to reconsider her government’s position on monetizing debt, he said.

“That’s one of the reasons why I continue to buy gold in euro terms,” he said. “Because I think we’re going to walk in one day, the decision has been made, and you’re going to walk in and see gold up 20 euros on an opening and trade higher from there.”

Trader James Lebenthal said the German auction’s effect on the euro could benefit exporters.

“If you’re Angela Merkel, aren’t you trying to sort of balance on a see-saw?” he said. “On the one hand, you want the euro weak enough that it helps your export machine. But on the other hand, you don’t want the rest of your euro markets into which you’re selling to implode.

“I think this might be a bit of gamesmanship on her part.”

Chris Tevere, senior currency strategist at Forex.com, said he expected a materially lower euro over the next couple of weeks, as the break below $134.20 cleared the path toward October lows.

“If you haven’t been on this euro short bandwagon for the last several weeks, I don’t know if now’s the time you want to be initiating it,” he said. “You might want to wait for a cent and a half, two-cent pop perhaps.”

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Trader disclosure: On Nov. 23, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Karabell is long APL; Karabell is long MS; Karabell is long IBM; Karabell is long GOOG; Karabell is long ORCL; Karabell is long CAT; Karabell is long JOYG

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CNBC.com with wires.