How to Get a Bigger Bang From Selling the Euro
Euro bears are on the prowl. Here's how to sell the single currency and get a bigger bang.
The euro is up and down today, but bearish investors are expecting worse.
"What we'd expect to see is an implosion in the euro, and that's not happening," says Todd Gordon, co-head of research and trading at Aspen Trading Group, noting that there have been snippets of good news, like the European Central Bank's successful bank lending initiative. Still, he says, "the downward trend is in place."
Gordon told CNBC's Scott Wapner that he thinks the euro could hit 1.2550 against the dollar in the first quarter of 2012, and drop further to around 1.20 later in the year.
Not surprisingly, Gordon recommends selling the euro - just not against the dollar. "For the next couple of weeks, if you want to go short euro, go short euro against a currency with a little bit more bang for the buck," he says, and that currency is the Australian dollar.
Australia benefits from its strong ties to China, since the Chinese government is prepared to take all kinds of steps to support its markets. So Gordon wants to sell the euro against the Aussie at 1.2925 with a stop at 1.3025 and a target of 1.2725.
You can watch the discussion on this videotape.
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