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Stormy Skies Ahead for Euro: Strategist

John Block | Botanica | Getty Images

It's game on again for the dollar-euro trade.

The euro-dollar pair was one of the more confounding currency duos in 2011, but Willie Williams, director of institutional derivative sales at Societe Generale, says the trade is back.

What's changed?

Disappointing bond auctions in Europe and last Friday's employment report - all of which made investors again ponder the implications of another possible round of quantitative easing.

"Going into this past week, before the Spanish auctions and before the U.S. payroll numbers, I think the market viewed QE3 as beneficial for high-yielding currencies as well as risky assets," Williams told CNBC's Scott Wapner.

But then came the disappointing economic and market reports, and "now suddenly the world is back on the view that if there is QE3 it means that a lot of things are starting to go horribly wrong."

That kind of risk aversion is bad for the euro, and the troubles of the Spanish and Italian banks aren't helping either, so Williams wants to sell the euro against the dollar. He recommends entering the trade at 1.3100 with a stop at 1.3250 and a target of 1.2600.

You can watch the discussion right here on the video.

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