The euro reached an eight-week high of $1.27 against the U.S. dollar on Friday, continuing its turnaround rally that has seen the currency rise 7% after hitting a four-year low in June.

Harvard professor Niall Ferguson isn’t as “sanguine” as the market. “Between sovereign debt and banks Europe is still in deep, deep in trouble,” he tells Tech Ticker’s guest host Joe Weisenthal. “I’m not feeling too confident about Greece. I feel pretty nervous about the banks and the stress tests,” he says.

Policymakers hope the European bank stress test results on July 23 do for Europe what similar studies did for the U.S. last year — in other words, acting to calm investors’ nerves and ignite a rally. That’s far from a sure thing. According to Bloomberg reports and data, “European regulators have told lenders their planned tests may assume a loss of about 17 percent on Greek debt and 3 percent on Spanish bonds, according to two people briefed on the talks. Credit markets are pricing in losses of about 60 percent on Greek bonds should the government default.”

In Ferguson’s opinion, Europe has still not dealt sufficiently with what started the euro crisis — Greece. Even after a trillion-dollar bailout from the ECB, IMF and European countries, Ferguson says the lack of a concerted fiscal solution means, “this problem is completely unresolved.” Having just returned from Athens, Ferguson observes, the Greek “economy is contracting at a really high rate, there’s no sign of recovery. If anything, it’s a death spiral.”

All these issues won’t spell the end of the euro, says Ferguson, but he is confident it will result in a weaker euro. Interestingly, for someone preaching austerity in the U.S., Ferguson warns that too much focus on deficit reduction in Germany — Europe’s largest economy — could be detrimental to the rest of the Eurozone. “[We] don’t need Germans to tighten their belts at this point.”

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