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Your Year-End Euro Trade

Europe is facing more headwinds, this strategist says. Here's how to profit from the stormy weather.

Hurricane
AP
Hurricane

Between a looming recession and the ongoing debt crisis, things are looking less than great in Europe, says Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank. She believes the euro could eventually sink to 1.18 against the dollar, right around its fair value, she told CNBC. And right now, she says, with markets thin, "even the slightest bit of news is moving euro more than it should."

Certainly, the euro could have its upticks on the way down, Bourdeau says.

For example, with European equities down for the month, "I think there will be some rebalancing of FX hedges for equity portfolios" that could benefit the euro. And of course, there could be dollar-weakening events like a third round of quantitative easing in the U.S.

For now, though, with key European economies weakening and U.S. economic data gradually improving, Bourdeau wants to sell the euro. And since she is still bullish on commodity currencies, she recommends trading it against the Canadian dollar. Bourdeau wants to enter the trade at 1.3190 with a stop at 1.3255 and a target of 1.2900.

You can watch the whole discussion on the videotape.

Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Currency Terms. Top currency strategies are broken down for you in Currency Class.

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