6 ETFs to Ride the Euro’s Changing Fortunes

February 26th at 1:00pm by Tom Lydon

ETF EuroWith Greece in such dire fiscal straits, the euro is faltering. Will it stay weakened? While few in Europe might be rejoicing about the state of their depressed currency, the mixed sentiment is an opportunity for exchange traded fund (ETF) investors.

Greece may try to float a small bond offering, which comes on the heels of some kind of “good news” in  regards to taxation and spending, remarks Jon Weisenthal for Business Insider. Weisenthal expects that speculators will be caught by surprise, the announcement will be timed to coincide with other “support” from the rest of the European Union, which could cause the euro to appreciate, and Greece would then dish out its debt offering.

For now, though, the euro is declining. While experienced currency traders might gravitate toward using a forex account to short the currency directly, the average currency trader may find it easier to use short euro ETFs, comments Ron for Benzinga. [ETFs Lag on Eurozone Debt.]

One such option is the UltraShort Euro ProShares (NYSEArca: EUO). EUO tries to provide twice the daily inverse performance of the euro against the U.S. dollar. The reasoning goes that the euro is falling as a result of Greece and other E.U. countries are failing to service large public debts and may have to default.

If Greece were to be bailed out, the euro may gain some strength, but other members in the eurozone have an equally poor fiscal outlook. Countries like Portugal, Ireland and Spain may pose problems for the euro.

But wait a minute. Before you dive in and buy a short ETF, understand how they work, what the risks are  and decide whether they’re actually right for you. [Leveraged and Inverse ETFs: What You Should Know.]

For more information on the euro, visit our euro category. Or, take a look at our ETF Trends’ Guide to Currency ETFs. Other euro currency ETFs and ETNs include long, double long and double short options.

  • Market Vectors Double Long Euro ETN (NYSEArca: URR)

  • Market Vectors Double Short Euro ETN (NYSEArca: DRR)

  • Ultra Euro ProShares (NYSEArca: ULE)

  • CurrencyShares Euro Trust (NYSEArca: FXE)

  • WisdomTree Dreyfus Euro (NYSEArca: EU)

Read the disclaimer, as Tom Lydon is a board member of Rydex|SGI.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.