Currency traders thought they had it made. But just as they got used to making their "easy money" one way bets on the euro, the unkind markets stepped in and "spooked" them.

Let me explain.

Thursday morning, April 3rd, the European Retail Sales numbers unexpectedly dropped to -0.5 percent. Economists were only expecting a 0.2 percent drop — if that much.

No one was expecting the Eurozone to turn out a negative number. Euro traders were floored. They ran for cover, dumping the EUR/USD.

Germany, the biggest country in the EU, registered a drop of 1.6 percent. This is when traders started to realize the U.S. economic slowdown has finally reached them too.

The British pound also dropped right along with the euro when Goldman Sachs lowered its earnings outlook for U.K. banks.

Then the IMF released a statement that announced they had lowered their economic growth forecast to 1.3 percent from 1.6 percent previously.

Combine all of this information and you have the makings of a rate cut in the Eurozone (as I've been predicting for some time). The simple fact that we could see one sent the euro tumbling.

In America, on the same day, the ISM Non-Manufacturing Index (the Services Sector reading that accounts for 88 percent of the U.S. economy) numbers came out at 49.6. That's a little stronger than the 49.3 number last month. While this is still in the contraction level which is below 50, it shows that the contraction was slower than expected.

On top of this, the futures market in the U.S. now only predicts an 88 percent chance of a quarter point interest rate cut when the Fed meets for a two-day meeting on April 29 and 30, and only a 12 percent chance of a half percentage point cut.

The euro could remain in the stratosphere as long as the data were strong. But now that some dollar data are surprising to the upside and some European data are starting to surprise to the downside, that picture is changing.

In fact, even on "weak dollar data" such as last Friday's Non-Farm Payroll report, the euro couldn't sustain a respectable rally against the buck even though 80,000 more jobs were lost and the unemployment rose from 4.8 percent the previous month to 5.1 percent this month.

This means a change is coming for the EUR/USD exchange rate. The euro may not plummet tomorrow against the buck. We're still in a bit of a transition phase. However, it's definitely coming.

I believe the euro will sell off broadly against most currencies, not just the dollar (but certainly against the dollar).

Once the fall starts, the euro will finally work its way down to the 1.46-1.50 level in the upcoming months.

Translation: If you've been shorting the euro, you'll be rewarded in the coming months.