The euro looks set to reverse some of its recent losses against the dollar and yen as investors scramble to cover bets that the currency will fall, Chris Zwermann, global strategist at Zwermann Financial, told CNBC Wednesday.
"The situation at the moment in the market is a lot of people are short in the euro," Zwermann said.
Concerns over Greece’s public deficit led many investors to sell the euro as the monetary union struggles to bring the situation under control. Zwermann said he believes that expectations for further declines may have been overblown, leaving investors exposed.
Meanwhile, the pressure on investors to get out of carry trades, where capital in low-yielding currencies is used to purchase assets in high-yielding currencies, is over and there could be some reaction in the opposite direction, according to Zwermann.
"We have done the retracements and I think here if you see a reaction it will even go up for the next 10 big figures so $1.47 is on my list for the euro/dollar and I think most of that will be short covering," Zwermann said.
- Watch the full interview with Chris Zwermann above.
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