The euro's upward move on the outcome of the Greek election was short lived, to say the least. Time to look elsewhere for a trade.
As soon as it became clear that pro-bailout parties had prevailed in the weekend's Greek election, the euro caught a nice updraft. But before you could say "New Democracy party," it went.....pffffft.
Claudio Piron, head of emerging Asia rates strategy, at Bank of America Merrill Lynch, has a few reasons why.
"We had this clear focus on this event risk, but once that has transpired we have a Spanish bill auction on Tuesday, a Spanish bond auction on Thursday. On Thursday as well we get the banking audit from Spain. We have the euro group meeting on Thursday. We have the G7 leaders' summit occurring on Monday, and not least, the Fed on Wednesday," he told CNBC. "There are all kinds of other risks and factors that are now reasserting their focus for the market."
Given the uncertainty surrounding many of those events, Piron says strategists at his firm are focusing on the other side of the globe, and recommending selling the Australian dollar against the New Zealand dollar.
"Both in some sense are risk-on currencies," he says, but "we felt that the kiwi relative to the Aussie had underperformed more, and the mix of data may be a bit more preferential toward the kiwi.
Piron also notes that the Reserve Bank of Australia will be releasing minutes from a Monetary Policy Committee meeting later this week.
You can hear the whole discussion on this video clip.
MULTI CURRENCIES v The Dollar
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