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This is the key level for the euro

This is the key level for the euro

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This is the key level for the euro

This is the key level for the euro
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It's a big week for Europe—and maybe even the United States. That's because the European Central Bank will be meeting Thursday and it’s expected to cut rates again.

The euro is already near its three-month lows and has dropped 2 percent in just the last month. According to Richard Ross, global technical strategist at Auerbach Grayson, it can drop even lower.

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Looking at a one-year chart of the euro versus the U.S. dollar, Ross notes the currency has generally stayed above its 200-day moving average.

"The trend has been higher as (the) economic recovery in the EU—which is somewhat implausible—has provided somewhat of a nice tailwind for the euro," said Ross, a "Talking Numbers" contributor.

(Read: Euro pinned to recent lows, wary of soft EZ inflation data)

But the euro has twice tested the $1.40 level this year and failed, forming a double top pattern. The neckline of that double top, according to Ross' chart, is the $1.3645 level, which the currency broke below. That also happens to be around where the 200-day moving average is at the moment, making its recent decline the first time the currency has been below the 200-day since September 2013. Ross sees that as a bearish sign.

"If that breakdown holds—and I think it does—that provides a measured downside target of another 3 cents using the height of that pattern," Ross said. "I'm looking for $1.33 on the euro this summer."

Gina Sanchez, founder of Chantico Global, also sees a down move ahead in the euro, even though she believes a rate cut is already priced in. That's because U.S. rates may rise. "We're seeing a situation in the U.S. where investors are starting to position for higher [U.S.] rates," said Sanchez, a CNBC contributor, citing outflows in bond ETFs. "That's significant because that basically says people are finally expecting rates to rise. [That] hasn't happened all year. We've seen rates really benign in the U.S. and that has left the euro stronger than it probably should have been."

(Read: ECB action has some on edge, others unfazed)

Economic data out of Europe show some bad signs, which could require more monetary easing down the road, according to Sanchez.

"The Europeans do have a habit of disappointing but I think further easing is necessary," she said. "If you see that, combined with rates rising in the U.S., I think that combination will definitely depress the euro."

To see the full discussion on the euro, with Ross on the technicals and Sanchez on the fundamentals, watch the above video.

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