European Central Bank President Mario Draghi's canceling of his Jackson Hole speechspells a buying opportunity, this strategist says.
Pity the many strategists who were calculating what European Central Bank President Mario Draghi would say at Jackson Hole. Now that he has cancelled, they need to rethink.
Boris Schlossberg, managing director at BK Asset Management, is thinking the euro looks pretty good.
"There's a lot of speculation that Draghi is not coming because he is working on a serious bond support program in the ECB" ahead of the bank's meeting on September 6, he told CNBC.
Draghi's tough talk on preserving the euro is giving investors confidence that the common currency will survive the crisis, Schlossberg says. "I think you are seeing a different narrative going on," he adds, pointing to falling yields on Spanish debt as evidence of improving sentiment.
At the same time, there are many investors with short euro positions, and they will have to cover those positions if the euro's strength continues.
So Schlossberg wants to buy the euro at 1.2600. "If we can break through 1.2600, it's going to be a lot of short covering going forward" he says. He recommends setting a stop 1.2450 and a target at 1.2700, "and then see if it can squeeze all the way up to 1.2950."
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