The euro should get a boost from Tuesday's agreement on a EUR130 billion aid package for Greece, but the celebration will be short-lived and the common currency could drop as low as $1.20 by fall, Bernard Lock, head of Asia Pacific for currency hedge fund FX Concepts, told Dow Jones Newswires

"Beginning in April and May we should find the euro weakening. The knee-jerk effect of Greece staying in the euro zone will wear off and the long-term forces of demand and supply will kick in," Lock said in an interview on the sidelines of the Asia Forex Forum conference.

Part of his bearish euro view is based on the belief that central banks, which in the past five years have bought more euros in an attempt to diversify away from the dollar, will reverse course given fundamental structural weakness in euro-zone economies. European leaders won't frown on such a development, as "a weaker euro increases the competitiveness of the whole euro zone," Lock said.

European finance ministers, Greek leaders and the International Monetary Fund Tuesday announced the final agreement on a deal that will see Greek bondholders take losses and Greek debt reduced to around 120% of the country's gross domestic product by 2020. The euro had been gaining this week in anticipation of a successful conclusion, and reached $1.3293 after the announcement.

Lock said the danger that Greece will exit the euro zone is far from put to rest, but Greece will get a reprieve for this year at least.

Investment flows into Asia will continue, but are slowing some this year as yield-hungry investors look to Latin America and elsewhere for bargains, Lock said. "Asset prices in Asia aren't cheap, compared with five or 10 years ago," he said.

Investors are also nervous about local governments in China carrying too much debt, and that could scare foreign capital away as well, he said.

A key risk in 2012 for foreign-exchange investors is volatility in commodity prices, with the Australian and New Zealand dollars particularly vulnerable, he said.

"Most people believe Australia is a one-way ticket. But that may not be the case," said Lock. A sharp fall in commodity prices would hit Australia's exports, affect the country's balance of trade and put downward pressure on the Aussie dollar. "We wouldn't be surprised to see it retreat by 15% or 20% after May of this year," he said.

With regard to the euro, Lock said it may rise as high as $1.37 before beginning its descent.