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How to Trade the Euro's Next Stop

Wednesday, 26 Sep 2012 | 5:19 PM ET

The euro bulls are going into hiding as political tumult in Europe grinds on. Here's one strategist's plan.

Well, it was fun while it lasted. The summer months brought growing optimism that the euro zone would avoid catastrophe. But now, with protests in Greece and Spain, and Spain dragging its heels on a bailout request, the worries are back.

Kathy Lien, managing director at BK Asset Management, sees "more pain for Spain and more pain for the euro" ahead, since what was an economic crisis now is both political and social as well.

Not only that, Lien told CNBC's Simon Hobbs, "there's a very growing risk we could see Moody's cut Spain's rating, which would be a slippery slope for the euro." That would put Spain's rating at junk level, which can't make market access any easier.

Trading the Euro's Next Stop
A currency play on the euro amid continued unrest in Spain and Greece, with Kathy Lien, BK Asset Management. There's going to be more pain for Spain, and more pain for the euro, she says.

Spain will also introduce its new budget this week, which will likely bring more cuts - and in turn possible fuel more unrest, adding to the vicious cycle.

So Lien wants to sell the euro against the dollar on a break below 1.2825 with a stop at 1.2975 and a target of 1.2600.

Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class.

Talk back: Tell us what you want to hear about - email us at moneyinmotion@cnbc.com.

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