ETF Chart of the Day: Dollar, Euro Currency Funds | ETF Trends

With market volumes lacking this week going into the New Year’s holiday and another shortened week of trading beginning next Tuesday, we find the heightened activity in U.S. dollar and euro exchange traded funds on Wednesday quite notable.

EUO (ProShares UltraShort Euro) closed at its highest level since January of this year on slightly above average trading volume (4.3 million shares) after 7 sessions of tepid volume. EUO is designed to provide 2 times the daily inverse return of the euro versus the U.S. dollar. [Euro Breaks $1.30]

FXE (CurrencyShares Euro) likewise plunged to recent lows, challenging the $128.15 a share intraday low that was registered in January of this year, and we have also seen bullish looking flows in UUP (PowerShares US Dollar Index Bullish) for at least the past month.

UUP has followed a volatile path this month, trading as low as $21.97 a share at the beginning of this month, surging to $22.70 mid-month, and closing at $22.55 yesterday. Despite the relative strength and weakness versus the euro during the month of December in UUP and thus the U.S. dollar, we have seen steady and consistent call buyers in UUP for at least the past month.

It seems that options players are posturing for a stronger U.S. dollar, and thus a weaker euro, not only according to UUP options flows, but we continue to see put buyers in FXE as well as call buyers in EUO, which is basically the same sentiments expressed as those by the UUP call buyers.

UUP traded huge volumes yesterday, and again we emphasize the slow nature of this holiday week and the fact that overall volumes in the marketplace have been substantially light in recent sessions. We also pointed out large inflows via creations in UUP last week in our weekly recap. [Investors Favor Stock and Dollar ETFs, Sell Gold]

For those ETF investors looking to capitalize on the recent volatility in the U.S. dollar and euro, there are other alternatives in the space outside of the aforementioned funds.