The euro has taken quite a fall as worries about the debt crisis there have grown, and this strategist says there is more to come.
Thinking about titptoeing into the euro now that it has given up so much ground?
Not so fast, says George Davis, chief FX technical analyst at RBC Capital Markets.
"The bottom line here is that the market has lost patience with the European authorities, given the lack of a concrete resolution" to the crisis, Davis told CNBC's Melissa Lee. "That's created a bearish backdrop for the euro and on the flip side, it's been a positive for the U.S. dollar. We think the risks are that that's going to continue."
Davis recommends watching for the euro to tick up and selling on that move. He would sell the euro against the dollar on a bounce up to 138.50, add to the position if it rises to 1.40, and use 134.50 as a target with 1.4100 as a stop.
Given how quickly the euro has fallen, it might not take long for it to reach Davis' target. He says there is technical support around 1.3425 to 1.3250, but if the euro moves through those levels, "over time, an extension down towards the 1.32 area and possibly lower is not off the cards."
You can catch the full interview in the clip.
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