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Where the Euro Is Headed Now

David Gannon | AFP | GettyImages

German Chancellor Angela Merkel is making a southern trip, and this strategist sees the euro heading in the same direction.

German Chancellor Angela Merkel is heading to Greece, and she's not likely to get much of a reception.

But that is the least of her worries. Not only is the Greek economy in tatters, and Spain's is a mess as well. Meanwhile, Merkel is facing an election battle at home.

"What she doesn't want ahead of that election is for Europe to implode," says Rebecca Patterson, chief investment officer at Bessemer Trust. As a result, Patterson told CNBC's Melissa Lee, Merkel will probably "play nice" and work to support the euro at least until after she is reelected.

Maybe so, but that doesn't mean the common currency is out of the woods.

"There's still going to be a lot of uncertainty," says Kathy Lien, managing director at BK Asset Management. On top of the Merkel trip, euro zone finance ministers are meeting, Spain has regional elections, and more. So in trading terms, she says, "the risk is to the downside in the euro-dollar."

Lien's approach to the trade is to sell into weakness. She recommends waiting until the euro breaks to 1.2900, and then going short the euro against the dollar with a stop of 1.3050 and a target of 1.2650.

Todd Gordon, co-head of research and trading at Aspen Trading Group, likes Lien's trade, saying technical indicators favor waiting for weakness to sell.

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