In the future, the ECB will still use inflation as the primary target for its monetary policy, adding stability to its currency, and EU members will crack down earlier on indebted countries. [6 ETFs to Ride the Euro’s Changing Fortunes.]
When will it be time to buy the euro? According to our strategy, when it crosses the 200-day moving average. These days, though, it’s a hefty 6.8% below that point. Watch this one and wait for the trend to appear before determining your next step. [How to Follow Trends.]
- CurrencyShares Euro Trust (NYSEArca: FXE). FXE is highly liquid, which allows investors to trade in and out at 1-penny spreads, and the fund has no credit exposure in the European short-term paper markets.
- WisdomTree Dreyfus Euro (NYSEArca: EU). EU has better tax treatment – investors who hold the fund for more than a year qualify for capital gains tax rates. FXE’s gains, on the other hand, are taxed as ordinary income. EU invests in short-term European government and commercial paper.
For more information on the euro, visit our euro category.
Read the disclaimer, as Tom Lydon is a board member of Rydex|SGI.
Max Chen contributed to this article.