Bearish sentiment against the dollar remains strong even with the Eurozone debt crisis as investors continue to fear challenges in the U.S. on debt and spending.
There are other ways to profit from a weaker greenback than just currency ETFs, some analysts point out. Certain exchange traded funds can help diversify U.S. dollar exposure.
Inflationary pressure is evident in just about every economy as of late, and to alleviate this, many countries are allowing their currencies to appreciate. Michael Rawson for Morningstar reports that this pattern will eventually lead to a weaker U.S. dollar, especially as the Federal Reserve is holding interest rates in the U.S. below inflation. [Dollar Rally Tarnishes Gold, Silver ETFs.]
“Despite widespread expectations for a weakening dollar in the long term, we don’t think dramatic portfolio shifts or direct foreign-currency holdings are called for. It’s devilishly hard to time currency movements. Compound the difficulty of timing the market is its zero-sum nature: The only way to make money in currencies is to take money from someone on the opposite side of one’s trades, ” he writes. [Dollar, Euro ETFs Back For Test of 50-Day Average.]