How to Trade Euro Weakness


Bearish on the euro, are you? Here's a way to trade that idea using one European country's current strength.

Andrew Busch, global currency and public policy strategist for BMO Capital, believes the euro is going to weaken from current levels, but instead of trading the single currency directly, he suggests that investors "fade this move a little bit."

Looking ahead, Busch expects an announcement soon on Greece from the European Union and the IMF, and he thinks the news for Greece will be bad.

"It's probably going to be negative, saying that Greece needs to do more work to get the bailout money," Busch told CNBC. That will be negative for the euro, and relatively good for the dollar, he said.

In contrast, the news coming from Norway is positive. Busch pointed out that unemployment is a low 3.1%, he expects the central bank to announce an interest rate hike on Thursday. So he believes the Norwegian krone will strengthen relative to the dollar.

Busch's trading recommendation: sell the U.S. dollar and buy the krone at 5.5050 with a stop at 5.5550 and a target of 5.4050.

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