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How to Trade the Sliding Euro

New Zealand
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New Zealand

The Greek electionfailed to provide a sustained lift to the euro, and this strategist has a plan to trade the weakness.

Election? What election? Despite the victory of the pro-bailout parties in Greece, the euro is once again on a downward slide.

Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, wants to ride that wave.

Bourdeau is looking ahead and she doesn't like the risk she sees in the coming days.

"I'd like to be short the euro simply because we have a Spanish bond auction coming up Thursday, and also the results of an external assessment of Spain's capital requirements for their banks," she told CNBC's Melissa Lee. "I think that will continue to weigh on euro."

Bourdeau wants to steer clear of the dollar for now as well. She says there is "some hope that the Fed may continue Operation Twist this week," which would weigh on the greenback.

Still, that move—especially if it's followed by a rate cut by the European Central Bank, which many investors think is a distinct possibility—could give a lift to commodity currencies, Bourdeau says. And she has her eye on the New Zealand dollar.

"I believe there's been some sovereign interest to switch some of their reserves into kiwi," she says, and she notes that the currency has also held up well in the face of euro zone turmoil.

Bourdeau wants to wait for a bounce, and then sell the euro against the New Zealand dollar at 1.5890, setting a stop at 1.6070 and a target of 1.5590, which has been the recent low.

You can watch the discussion on the video clip.

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