Look out below! Euro exchange traded funds (ETFs) are sinking fast this morning.

The currency’s decline came shortly after European Central Bank President Jean-Claude Trichet spoke, toning down his earlier comments about the potential for interest rate hikes to tamp down inflation, says The Wall Street Journal.

That led to a broad selloff in the troubled currency, which has been under fire since Europe’s debt issues came to light last summer. CurrencyShares Euro Trust (NYSEArca: FXE) and WisdomTree Dreyfus Euro (NYSEArca: EU) both lost about 1% in early trading today.

Good news for you, though: there are a lot of ways to play this move, especially if it continues.

  • ProShares UltraShort Euro (NYSEArca: EUO): This fund, designed to move in the opposite direction of the euro, is up 2.3% today. It’s the most direct way to capitalize on a euro downtrend, but leveraged ETFs do come with risks. Read up on them so you don’t get burned.
  • PowerShares U.S. Dollar Bullish (NYSEArca: UUP): Naturally, when the euro loses value, the U.S. dollar gains it. UUP has struggled over the last 10 days – it’s down 2% – but weakness in the euro could change all that.
  • CurrencyShares Japanese Yen Trust (NYSEArca: FXY): Although a strong yen has been a problem for Japan’s export business, it’s been great for FXY. If you want to forget Europe and the euro entirely, this fund could be one of the better bets.
  • iShares MSCI Sweden (NYSEArca: EWD): You might be tempted to believe that all of Europe is in a funk right now, but that simply isn’t true. Check out Sweden – a country not on the euro. In six months, this fund has gained 16.5%. Contrast that with some of the debt-laden countries, which have been pretty lackluster. Also, they’re really happy over there.
  • SPDR DJ Euro STOXX 50 (NYSEArca: FEZ): The falling euro may be bad for Europe in many regards, but the area of exports is not one of them. A cheap euro will make Europe’s products more attractive to overseas buyers, benefiting European funds like this one.

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

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.