Slovakia says yes to the expanded bailout fund, but this strategist says the euro's fun is pretty much over.
You might think that when all the members of the euro zone finally ratify a plan to expand the European bailout fund, there might be a little celebration. Not so fast.
"From a market perspective, it really was clear on Sunday what was going to happen," and now it's time to look at what is and isn't really supporting the euro, says Jens Nordvig, global head of G10 FX strategy at Nomura Securities.
Nordvig told me he thinks the euro has been rising because traders who were short euros have been getting squeezed, rather than anything fundamental. "What we're hearing is not very encouraging" as far as a grand plan to resolve the euro debt crisis. "I think that means this short squeeze is probably going to run out of steam pretty soon."
Nordvig recommends selling the euro against the dollar right around 1.37 with a stop at 1.40 - high enough to be sure to let the short squeeze run its course - and an initial target of 1.30. Why initial? Using a variety of valuation techniques, he thinks fair value for the single currency could be closer to 1.25.
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