Charts: Beware of Euro Pitfalls Against Dollar

The euro is likely to continue its rise against the dollar in the long term, but investors should watch out for setbacks in the near term, Royce Tostrams, technical analyst at Tostrams Groep, told CNBC Friday.

"Maybe the euro is a little bit overbought. It went too fast, too quick and you should wait for some setbacks," Tostrams said. "From the long-term perspective you should be long in the euro."

The euro has made strong gains against the dollar in the past few weeks, Tostrams pointed out. The weakness the currency saw in the first half of the year has been broken, he added.

Dollar weakness looks set to continue against the yen as well, according to Tostrams.

"You can't take any other conclusion than the dollar/yen is very, very weak. We have broken below the lows of 2008, below the lows of 2009, we are forming lower peaks so everything suggests stay out of the dollar/yen," he said.

Tostrams recommended that investors bet on the dollar to fall against the yen as well as against the euro.

The trend between the euro versus the yen is less clear and investors should wait to see if the currency cross breaks out of its current range higher or lower, he said