It’s a good idea to sell the euro when its going up like it was Tuesday, said Greg Salvaggio, senior vice president for Tempus Consulting.
Even if government officials manage to stabilize the debt situations of Greece, Portugal, and the other so-called peripheral countries, the European Central Bank isn’t going to be stepping up to boost growth by doing something like buying government bonds, a policy often call quantitative easing.
“The euro has a significant way to go. Even if they stabilize Greece there are some significant structural problems because of the inflexibility of the ECB. They’re unwillingness to do QE will mean stagnant growth for quite some time.
“The sovereign debt problems are going to hurt the engines of growth” — Germany and France, because they have to back their own banks or other countries.
It leads people to the U.S. dollar, like it or not, he said.
He said the euro will be capped at $1.3750 – not far from the $1.3680 it was trading at Tuesday – and could fall to $1.30.
