Draghi Not The Only One Telling Investors Not To Short The Euro

"It stays, it stays, it stays," an exasperated European Central Bank President, Mario Draghi, told a reporter Thursday, in response to a question about what he meant by saying the European common currency was "irreversible."

"It's pointless to bet against the euro. It's pointless to go short on the euro. It's pointless because the euro will stay," he added.

Part of Draghi's job, of course, is to inspire confidence on the future of the currency. But he wasn't the only one telling investors Thursday they'd be putting their money at risk by wagering the euro would fall.

In a note to clients, Thomas Stolper, Goldman Sachs' London-based chief foreign-exchange strategist, wrote that people should be looking to buy euros using dollars, anticipating a tidy profit if the euro goes up to $1.30, the firm's target. (It is currently trading around $1.22.)

Stolper's call to buy euros is based on various assumptions, including his judgement from mid-July that the euro is undervalued, as expressed on the chart below. It is also based on the assumption, Stolper notes, that Draghi would be willing to use "the unlimited ECB resources to anchor front-end rates," a proposition most market-watchers see as a possibility, but not a given.

Goldman Sachs research from July 13 suggests the euro is undervalued.

Additionally, Goldman appears to have a bullish interpretation of Draghi's announcement at the press conference Thursday regarding the role of the European Central Bank vis-a-vis Europe's established bailout funds. Goldman, like British bank Barclays Capital, understood Draghi's words that "the ECB cannot replace governments or the actions that other institutions have to do on the fiscal side" to mean Draghi was supporting "a reactivation of the SMP program but under the condition of a simultaneous EFSF/ESM program. Others, like French bank BNP Paribas, came to the exact opposite conclusion.

Of course not all foreign exchange strategists agree the euro is bound for an upswing. At Barclays Capital, head of European FX Strategy Guillermos Felices penned a research note Monday that included the following startling chart, which shows the bank expects the euro to drop to $1.15 within 12 months.

Barclays research from July 30 shows the bank believes the euro will drop steeply against the dollar.

But, interestingly, even Barclays agrees with Draghi that shorting the euro is not worth the risk. The bank's recommendation: Buy "put spreads" on the euro that will pay off handsomely if the currency falls to $1.19 or lower within the next six months, but will protect investment if the euro rises instead.