U.S. Dollar's Strength Fades, Taking ETF With It | ETF Trends

At the height of the European debt crisis, the U.S. dollar enjoyed safe-haven status. But in the last six months, the PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) exchange traded fund (ETF) has last nearly 8%.

The U.S. Dollar Index, a benchmark that tracks the performance of the dollar versus a basket of foreign currencies, hit a fresh four-month low this week, says Matthew D. McCall for Index Universe. Are the heady days of the dollar over? This chart sure doesn’t look pretty.

Proof of the dollar’s low is seen in the fact that about 85% of foreign-exchange transactions worldwide are trades of other currencies for dollars. [Inflation Fears Weigh On ETFs.]

Barry Eichengreen for The Wall Street Journal reports that the greenback is still the world’s reserve currency, and more than 60% of the foreign reserves of central banks and governments are in dollars. But analysts believe that over the next decade, there will be a battle for power among other currencies as the dollar retreats. [Dollar ETF Gets A New Lease On Life.]

If the dollar is finished – even for now – you can play it with PowerShares DB U.S. Dollar Bearish (NYSEArca: UDN), which is designed to move higher as the dollar weakens, and it’s looking nice lately.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.