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VIDEOHow to Capitalize on Dollar Weakness
The euro has rallied against the US dollar in recent weeks. Here, how to take advantage of it.
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The euro has rallied against the US dollar in recent weeks, as we note PowerShares DB US Dollar Index Bullish (UUP) is down nearly 5% from its June 7 high of $25.84. Currency Shares Euro (FXE) meanwhile is up about 5% from its June 8 low of $118.79. Both products made significant moves yesterday, on better than average trading volume, with FXE closing above its 50-day moving average, and UUP breaching its 50-day moving average and sharply gapping down.
Institutional options flows seem to be positioning for further longer term downside in the US dollar, as my firm noted buyers of December 23 puts in significant size during Thursday’s session. A potential way to capitalize on additional weakness in the dollar through an ETF would be with PowerShares DB US Dollar Index Bearish (UDN). Additionally, we note macro pressure and a significant downside move in gold yesterday, with SPDR Gold Shares (GLD) falling over 4% in the session and closing below its 50 day MA, and related ETFs IAU and SGOL following suit. In a Street One Financial ETF Daily report today, market technician David Chojnacki, who's previously been bullish from a technical standpoint in the gold ETFs, notes that GLD “broke down last session below two important levels of support ($120.70 and $117.25) and is “no longer a buy at these levels.”
Please see the charts below for further context.
UUP
FXE
UDN
GLD
IAU
SGOL
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