Is Now the Time to Short the Euro?

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The Bank of Japan's easing move is leading one strategist to look for a sell sign for the euro.

With all the talk about a potential stimulus move by the Bank of Japan, the fact that it announced new asset purchases was hardly a shocker. But it did leave Kathy Lien, managing director at BK Asset Management, with a trading idea.

Lien told CNBC's Melissa Leethat the immediate effects were nothing to write home about.

"The market prepared for the move, the announcement came, and we did see yen weakness, but that evaporated quickly," Lien says.

But she's bracing for more. Noting that the dollar took a while to fall after the Federal Reserve's announcements of earlier quantitative easing initiatives, Lien thinks the euro could still weaken.

There is other risk-sapping news too, Lien notes, and it could dent the euro. Standard & Poor's declined to cut Spain's credit rating, which Lien thinks may leave investors feeling that the country's bailout will drag on, and Germany has taken new exception to the euro zone bank supervision plans.

So if the euro breaks below 1.2900, Lien says, "I think there's a little bit of downside opportunity here."

She wants to wait for the euro to breach that 1.2900 level, and then enter a short euro dollar trade, setting a stop at 1.3050 and a target of 1.2700.

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