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What Currency ETFs Can Tell Us About the U.S. Economy

In truth, CurrencyShares Euro Trust has been faltering at the resistance of its 100-day intermediate-term trendline. If FXE stumbles at its 100-day yet again, it might be reasonable to assume that investors fear systemic risk for the financial system as well as ongoing economic hardship for the globe's largest economy. Developed world and emerging-markets stocks would retreat.

PowerShares Dollar Bullish (UUP) also depicts the likelihood of potential risk aversion. Not since the "sell-in-May" swoon have we witnessed a mad dash to own the greenback. If the current price of UUP hangs around its intermediate-term moving average instead of moving lower, investors may lose faith in the resolve of a "united" euro zone.

Keep in mind, an investor who wishes to hedge against ownership of world equities might want to purchase UUP. Over the last six months, UUP has moved in the opposite direction of the iShares All-Country World Index Fund (ACWI) 80% of the time.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a Web site that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

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