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The Path of Least Resistance for the Euro

The euro is down 2.6% in just two days - a huge move for a currency - and this strategist sees more weakness ahead.

With the euro nosing below the 1.30 level against the dollar, is the worst over?

Hardly, says Todd Gordon, co-head of research and trading at Aspen Trading Group. "I think the path of least resistance is lower," he told CNBC's Melissa Lee. Between the fiscal austerity measures European countries will be adopting and the likelihood of lower interest rates, "the euro faces significant headwinds in 2012."

The end of the year won't be much better. Gordon actually thinks the euro could hit 1.2750 in the next two weeks. "We're in an illiquid market" as traders close their books for the year, "positions are coming off, and I think markets are having a little bit of temper tantrum that we didn't get QE3 from the Fed," he says.

The Australian dollar, though, is looking good. Gordon says. Australia's close economic ties with China are a challenge, given indications of a slowdown in China, but Gordon argues that if an upcoming flash China PMI report comes in "anywhere close to 50," it should give the Aussie a lift.

Gordon wants to sell the euro against the Australian dollar at 1.2950 with a stop at 1.3100 and a target of 1.2600.

You can watch the whole discussion on the videotape.

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