How to Trade the Dollar's Dovish Dip


Comments from the Fed took a bite out of the dollar, and this strategist has a plan to play it.

Since Federal Reserve Chairman Ben Bernanke indicated Tuesday that more quantitative easing was not off the table, the dollar has been feeling the effects — and the euro has looked stronger. Andrew Busch, global currency and public policy strategist for BMO Capital, has a plan to trade the move.

Sure, the euro rose after Bernanke's comments, Busch told CNBC's Melissa Lee, but it wasn't a widespread shift. "What we're going to do is try to play that," he says.

Busch sees the euro trading in a range from 1.30 to 1.35, so "let's just keep it simple, stupid," he says, and trade that.

One approach would be to wait until the euro hits 1.35 and enter the trade there, but if you want to enter it now, "you could put the trade on at 1.33 to sell it there and a 100-point stop and look to take it back at 1.30," Busch says. "Currencies are all about adjustment."

You can watch the discussion on this video.


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