Invesco CurrencyShares Euro Currency Trust
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The euro has been in a strong bullish trend against the U.S. dollar throughout 2025, supported by macroeconomic and policy factors. Key drivers for euro strength include U.S. debt concerns, lower U.S. interest rate prospects, and trade policy impacts on the dollar. Risks to the euro's rally include European debt issues, geopolitical tensions, and potential flight-to-safety flows into the dollar.
The Euro has rallied 16.23% against the U.S. dollar in 2025, breaking key technical resistance and maintaining a bullish trend. FXE ETF effectively tracks the Euro/USD exchange rate, offering liquidity and convenience for investors seeking Euro exposure in standard brokerage accounts. Despite the Euro's strength versus the dollar, gold has outperformed both, becoming the second-largest reserve asset for central banks, surpassing the Euro.
Despite recent inflows into FXE and euro strength, I believe U.S. equities and bonds remain the superior long-term allocation for global investors. The underlying narrative is bearish on the dollar, but in my view, it's not a trend justified from an intermarket perspective. That's why I believe the signs of overextension could trigger a contrarian market reaction.
FXE ETF gained about 14% in 2025 as euro gains steam versus the U.S. dollar ETF UUP. Policy shifts, solid EU GDP & fading demand for U.S. assets are driving the move.
For investors seeking momentum, Invesco CurrencyShares Euro Trust FXE is probably on the radar. The fund just hit a 52-week high and is up 13.16% from its 52-week low price of $94.08/share.
U.S. stocks have been witnessing massive sell-offs this month due to trade tensions. However, these ETFs survived the bloodbath.
FXE provides unleveraged exposure to EUR/USD, making it a hedging option for the U.S. dollar. Its recent rally has been fueled by market optimism related to Germany's potential for fiscal expansion and the ECB's indication that it might go slower on reducing the borrowing costs. The current threats to market expectations make FXE's trajectory quite precarious, and investors may want to consider alternatives if a hedge against the dollar is ultimately what they seek.
Union Pacific Corp said on Wednesday that Ferromex (FXE), the Mexican railroad it interchanges with, has resumed issuing permits for grain shuttle trains at the U.S.-Mexico border crossing at Eagle Pass, Texas.
Recent unemployment data supporting a "soft economy" narrative, increases the market expectations of a rate cut starting in September. Look into areas to gain.
Wall Street has delivered a moderate performance in the second quarter of 2024.
The European Central Bank (ECB) has finally cut its key interest rate, marking the first reduction since September 2019.
The Euro has been rangebound since July 2023, but a break and significant move is setting up. The EU economy is showing signs of a weak turnaround, but growth projections remain subdued. The ECB's dovish shift and potential rate cuts could negatively impact the Euro.
Driven by increased bets of interest rate cuts and a rising trend towards de-dollarization, the greenback is gradually losing its global dominance.
The euro is the world's second-leading reserve currency, but its path against the US dollar in 2024 is uncertain. The euro has been in a multi-year bearish trend against the US dollar since 2008, but the short-term trend is currently bullish. The war in Ukraine, falling US rates, the potential for a BRICS currency, and the upcoming US election are factors that could impact the euro-dollar relationship in 2024.
Subscribers to Chart of the Week received this commentary on Sunday, December 3.
The greenback???s subdued future expectations, driven by different economic factors, increase the need to hedge and diversify one's portfolio.
Many economists anticipate that the ECB is nearing the conclusion of its rate-hike cycle due to a slowdown in economic growth.
Markets are torn. Will the ECB hike this week or not?