Willie Williams, director of institutional derivative sales at Societe Generale, is equally negative, but he's more focused on market positioning and other factors.
"Normally when you see a move like this, you see volatility spike," Williams says, but that is not happening with the euro. "The market is not panicked, the market has its position on," and sentiment is running strongly against the single currency. He thinks that if the euro breaks through 1.26 it could fall all the way to 1.19 against the dollar.
Williams is a lot more bullish on the Canadian dollar, especially against the yen, since he expects the loonie to benefit from the improving U.S. economic outlook.
"Previously there has been a high correlation between the performance of Canada and the U.S.," he says, so that should benefit the loonie. He also expects the Canadian dollar-yen pair, which decoupled from the S&P 500 in the fourth quarter, to once again start moving more in tandem with the index.
Williams wants to buy the Canadian dollar against the yen at 75.00 with a stop at 73.50 and a target of 79.00.
You can watch the whole discussion on the videotape.
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