Montreal, Canada

If you're stuck with unwanted EUR now is not the time to sell. The currency is now heavily oversold on a short-term basis and will shortly record a big rebound following five straight weeks of severe losses.

From a 2009 high in late November the single European currency has sunk more than 9% heading into this morning's New York trading session. From its all-time high back in the summer of 2008 the EUR has now shed a cumulative 15%.

Up until the latest credit crisis in Greece, the EUR was the greatest thing since sliced bread. Everyone wanted a piece and usually at the expense of the American dollar, which peaked against the EUR in late 2001. But in the span of just a few months the EUR has gone from darling among global investors to dog.

The headlines could not be more bearish: short sellers continues to amass record positions against the EUR and Greece is struggling to confirm broad-based European Union (EU) financial support. Adding insult to injury, the Euro-zone's budding economic recovery ran out of gas late in the 4th quarter with the biggest economies (Germany, France and Italy) barely growing at all. Indeed, the next move by the European Central Bank (ECB) might be a rate cut, not a hike.

At some point I expect the EU led by the Germans and the French to officially bail-out Greece. That will make a de facto bailout a virtual guarantee across Club Med or other peripheral economies approaching the brink, including Spain, Portugal, Ireland and, possibly, Belgium. Italy and France are barely any better though they have a higher personal savings rate allowing the government to organically finance most ongoing debt obligations, at least for now.

If the Germans cave-in to a Greek bailout, which is inevitable, then the EUR will be relegated to a banana currency just like the dollar. Once you guarantee the balance sheets of fiscally irresponsible neighbors you can kiss your hard currency status goodbye. That's what lies ahead for the EUR.

If you're looking to dump EUR, consider the following two options.

First, don't abandon the single European currency completely. In a room full of currency drunks, the EUR is probably a bit more sober than the dollar – loaded with massive deficits. The yen is also no good though still benefiting from risk reduction in this environment. Longer term, the Japanese have a serious debt problem with government debt-to-GDP ratios approaching 200%.

Second, if you wish to hold some EUR then buy dollar-denominated gold, which acts as a hedge against EUR depreciation. Since the EUR peaked in November the price of gold in EUR terms has gained a cumulative 3.4%. This is what I'm doing for my EUR-based clients.

Finally, I'd be unloading unwanted EUR on a bear market rally north of 1.40 to 1.42 against the dollar. The EUR has declined sharply and is overdue for a quick reversal. Use any intermittent strength to sell above 1.40.