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Trading the euro: A seat on the Titanic?

With the European Central Bank (ECB) set to meet on Thursday, currency strategists are weighing up whether to join a crowded trade and short the euro or whether to go long and get comfortable with what has been described as a "seat on the Titanic."

The common currency - shared by the 18 nations in the region - has been a one-way trip south this year with the ECB expanding its balance sheet while central banks in the U.S. and the U.K. have been looking to reverse their ultra-easy policies.

The euro was trading at a two-year trough of $1.2571 on Wednesday morning, according to data from Reuters, before rebounding to $1.2621 by 7.30 a.m. London time. Weak manufacturing data from Germany just before 9:00 a.m. London time then forced it lower again to $1.2589. On Tuesday it hit a 26-month low against sterling.

Read MoreEuro zone manufacturing slows, Germany contracts

The currency has depreciated 8.22 percent year-to-date against a greenback that has recently hit a four-year high against a basket of currencies. The euro is on course for its worst yearly drop since 2005 and September marked its biggest monthly fall since February 2013.

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Ranko Berich, the head of market analysis at Monex Europe, a U.K.-based foreign exchange company, believes that the euro could be set for a major collapse. "A long position on the euro might as well be a seat on the Titanic," he said in a note on Tuesday.

Meanwhile, John Higgins, the chief markets economist at Capital Economics, has given a forecast of $1.15 for the euro by the end of 2016. "We suspect (the euro) will drop further as the monetary policies of the (Federal Reserve) and the ECB continue to diverge by more than widely envisaged," he said in a research note late Tuesday.

In the near team, spread better IG Markets is gearing up for a day of positioning, believing that its customers will be selling rather than buying, with the ECB set to meet on Thursday.

Read MoreDraghi pushes ECB to accept Greek, Cypriot loans

The Governing Council meeting will be in Naples, Italy, this month and will be one of only two ECB meetings a year that takes place away from its traditional home of Frankfurt, Germany. Analysts are expecting some sort of "full-blown" quantitative easing (QE) further down the line with the central bank beginning to buy the bonds of its sovereign nations.

But for Thursday, many are simply expecting that ECB President Mario Draghi will shed more light on what asset-backed securities will be purchased, a form of private-QE that was announced back in September. The Financial Times reported on Wednesday that Draghi is trying to persuade the governing council to buy bundles of Greek and Cypriot bank loans but could face opposition from Germany with officials expected to deem it to be too risky for the ECB's balance sheet.

Out of the 66 economists polled by Reuters this week, none are expecting Draghi to announce a further cut to its main refinancing rate on Thursday. This comes after euro zone inflation for September showed a further fall to 0.3 percent on Tuesday, from August's 0.4 percent figure. Data for Germany have also been weak, with businesses in the country highlighting an uncertain situation going forward and a disappointing investment climate.

Net shorts on the euro grew again last week, according to data from the Commodity Futures Trading Commission. Strategists believe that investors are buying the dollar at the expense of the euro with traders speculating on the timing of an interest rate hike from the Fed.

Read MoreECB QE good for emerging markets: Turkish Fin Min

With such a crowded trade, it's hard to find analysts who are expecting the euro to do anything other than fall. However, Abu Dhabi-based foreign exchange company ADS Securities says that the technical readings are indicating that the euro could be ready for a small bounce in the next few trading sessions.

Thus, traders with a short term view should be cautious, if ADS Securities is correct, although the company conceded that weekly momentum indicators continue to reflect bearish momentum in the longer term and are not showing the immediate signal for a corrective bounce.

The rate decision by the ECB is due at 12:45 a.m. London time on Thursday with a press conference with Draghi due at 1:30 p.m. London time.