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'Something Big' May Be Coming for the Euro: Strategist

Friday, 27 Jul 2012 | 4:19 PM ET

Happy days are here again for the euro - for now, says this strategist.

German Chancellor Angela Merkel and French President Francois Hollande gave the euro a boost today when they followed European Central Bank President Mario Draghi's euro pledge with one of their own. Kathy Lien, managing director at BK Asset Management, says the strength could continue near term.

Lien expects a lot of action for the euro next week, she told CNBC's Scott Wapner, what with upcoming central bank meetings and economic reports. And overall, she predicts, euro holders are likely to be happy.

"I'm long term bearish euros, but I do think there could be a little bit of a squeeze higher," she says.

Alluding to the comments by Merkel, Hollande, and other top officials, Lien argues that "all this talk we've heard from EU policy makers is telling us they're preparing the markets for something big." So she thinks the euro could see some short covering leading up to next Thursday's European Central Bank meeting.

Euro Rallies on Merkel Comments
Comments of EU policymakers are very positive for the euro right now, says Kathy Lien, BK Asset Management.

The U.S. could also give the euro a lift, Lien says. "Payrolls in the U.S. are looking like they could top 100,000 in the upcoming month. if that's the case, they could help our risk rally."

So Lien wants to buy the euro on a dip, right around 1.2325, with a stop at 1.2250 and a target of 1.2435 "for a quick pop higher in the coming week."

You can watch the discussion on the video link, starting at 0:36.

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