Why the Euro Is Primed to Rise

AP

European finance ministers are squabbling like the U.S. Congress, but it's not going to get in the way of a rising euro.

At least, that's the view of Paul Mackel, head of Asia currency research at HSBC.

"We think the euro is still going to remain resilient," he told CNBC. "Ultimately I think this currency is going to stay stronger than most people think."

Admittedly, a big part of that will be a byproduct of dollar weakness, Mackel says. "The dollar is probably going to move into more of a weakening environment. It's not so much that we like the euro for anything good that's going on in the euro zone."

There is the small matter of economic weakness, and more than a little political drama ahead.

But Mackel does see some encouraging signs on the continent, notably a decent Spanish bond auction and some respectable PMI reports.

"We're slowly working our way through some of this excessive fear we had earlier on," he says. Mackel expects the euro to hit $1.35 by the end of the year, and $1.40 by sometime in 2013.

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