When it rains in Spain, it pours. There is talk of a bank bailout there, and this strategist has a plan to play it.
Reports that Spain might be seeking aid for its banks as soon as the weekend got a definite reaction in the Spanish stock market. But Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional, isn't buying it.
"We're getting addicted to hope that central bankers or policymakers do something. This time it's a bank recapitalization plan for Spain," which would help them get on the road to recovery, she says.
Nice - but "I don't think we're going to get much bounce, if any, from any Spanish announcement," Patterson told CNBC's Melissa Lee. And "whatever we get, if we get a bounce, I'm going to fade it again" by selling the euro.
Patterson also points out that Germany will be meeting to talk again about the fiscal compact. She thinks they are likely to keep taking a hard line, which would hurt the euro.
So Patterson wants to sell the euro against the dollar at 1.2540, setting a stop at 1.2650 and a target of 1.2200.
The tight stop is to protect against two possible risks: the market is already very short the euro, and a victory by moderates in the upcoming Greek election could spark a relief rally.
Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, thinks the trade makes sense. "It's always paid to fade the rally, throughout the whole euro zone crisis," she says. "Any time you get a little bit of positive to moderate news, you should fade it because there's another fire that the EU officials end up having to put out."
Todd Gordon, co-head of research and trading at Aspen Trading Group, also likes the trade. He notes that the euro has underperformed other risk-related currencies, and notes that the 1.2620 level is serving as resistance.