Toxic Brew for the Euro


These strategists don't like what they see ahead for the single currency.

Through political tensions, iffy bond auctions, and lackluster economic data, the euro has been trading in a fairly tight range.

But the strategists at Wells Fargo think that could change.

"Activity data remains very subdued and debt market strains have re-emerged as a euro negative," they wrote in a note to clients, alluding to difficult bond auctions for some peripheral countries.

Wells Fargo is also watching for possible interest rate cuts by the European Central Bank. And looking at investor positions on the euro, they note that "FX positioning provides some scope for currency weakness as well."

On top of all that, they note that technical factors point to some euro weakness, with the 20-day moving average falling below the 50-day moving average.

The strategists expect the euro to reach 1.24 against the dollar by early 2013, and continue slipping to 1.22 from there.



Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class.

Talk back: Tell us what you want to hear about - email us at