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How to Trade the Risk-On Mood

Christchurch, New Zealand
Peter Adams | The Image Bank | Getty Images
Christchurch, New Zealand

Europe might be in a stew, but this strategist is looking at a risk-on trade.

New worries about the prospect of a reasonable and timely deal on Greece's debt are weighing on the euro today. But even so, Todd Gordon, co-head of research and trading at Aspen Trading Group, thinks it's time to put risk on.

"The U.S. dollar index feels like it wants to go lower," he says. "I think risk is on and the dollar is heading lower."

Gordon told CNBC's Scott Wapner that he expects a commodity risk-on rally ahead, and to that end, he is looking at the New Zealand dollar. The Royal Bank of New Zealand is meeting on Wednesday, he points out. "I don't think they're going to cut rates, and that's a bonus for the New Zealand dollar."

Given the ongoing challenges facing the euro, Gordon recommends selling that currency against the New Zealand dollar.

He wants to sell the euro against the kiwi at 1.6060 with a stop at 1.6200 and a target of 1.6000.

You can watch the whole conversation in the video.

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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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