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FXE

Europe Keeps Working, Particularly Ex the Euro. Charting HEDJ.Foreign markets have made some headlines in recent months. The German Dax and French CAC 40 hit record levels toward the end of 2023. Those indexes are generally priced in local currency, and a rising dollar in 2023 led to relative underperformance among US-traded ETFs. The US Dollar Index (DXY) has consolidated around the key 104 level lately. Amid this FX volatility, non-US funds that hedge currency risk have their merit. Research shows that hedging the dollar can work since US investors in international equities are susceptible to what is called “wrong-way” risk. That is, when stocks plunge, the move lower usually coincides with a surging dollar, compounding losses in foreign stock holdings. The WisdomTree Europe Hedged Equity Fund ETF (HEDJ) addresses this reality by focusing on holding shares in companies with significant exports while engaging in currency hedging to remove the risk of a declining euro. What I like about HEDJ’s chart today is that it has climbed to new cycle highs as of last month, whereas traditional Europe index ETFs remain well under their mid-2021 highs. HEDJ has historically performed well during the first quarter, with shares rising 71% of the time in February and 79% in all March instances, according to data from Equity Clock. But what about the price action on the chart? I see positive signs there, too. My featured chart illustrates that HEDJ continues to trend higher. Price is above both its rising 50-day and 200-day moving averages, and just recently held the key $41 to $42 zone. In terms of where the ETF may go from here, we can project a price target using the $31 low from October 2022 and the range highs between $41 and $42. That $10 to $11 height, added on top of the $42 breakout point, leads to a measure move price objective into the low $50s.
AMEX:HEDJLong
by mikezaccardi
EURUSD bottom of current trend channelI'm not normally a currency trader, but I do take a look at them here and there along with U.S. bond yields, I drew this trend channel awhile back, and now it's looking like there's a good chance EURUSD reverses back to the upside here soon. To further the basic idea here, in a couple weeks we will have another FOMC meeting, and based on the way the 3 month treasury bill has been trading lately, a nice peak above 5.4% in June, yield briefly coming back down, then back above 5.4% headed into July and has pretty much stayed there this whole time. Longer term note and bond yields have starting to creep towards the 3 month. I use the 3 month as the closest indicator of what the Fed will end up doing with its federal funds rate. If the 3 month stays as quiet as it has been for another two weeks, expect the fed to "skip" hiking this round once more. If that ends up being the case, that will only add fuel to the long Euro position in the short term. Then I had a thought occur to me, there's got to be an ETF that represents this trading pair for those accounts that don't do forex, and sure enough, there is. And it has options. $FXE. I think I may go ahead and dabble going long calls on the off chance I'm right and this bounces in the coming weeks.
Long
by dieseldub
US05Y-EU05Y EURUSD, just went long $FXEMy two most recent posts were identifying a potential upcoming trade idea behind Euro bouncing back vs. USD soon, the chart today has made it looked more prime for reversal, finding ever increasing support, and slightly weakening 5 year yields in both Euro and U.S.. The difference between the two looks like it may start to contract a little in the coming weeks as well, which should send Euro higher. As a slight update to my previous post linked at the bottom, I've updated that chart to include the EU05Y and US05Y yields on the same scale, and the difference between the two (US05Y-EU05Y) on a different scale on the left. It gives a little more complete picture that may help pick out the longer term trend shifts. Zoomed in some on just the EURUSD, seeing how it's seemingly bottomed out, finding support here, and attempted a sharp rally this morning that was equally sharply rejected, but seems like this it's found support again and the trend for the coming weeks may well be a reversal to the upside for the Euro. On the 5 year bonds side of things, both have set slightly lower highs than last week, with there being a bigger drop for the US 5 year than the Euro. Possible we're seeing a slow down of those yields going higher, with the US possibly losing a little more yield than the Euro. Seems prime for a reversal after more than a month and a half of the Euro sliding. With that in mind, I did go long some AMEX:FXE 20 Oct 23 101 strike calls this morning. A little risky and out of the money with some time left, but if this rallies as I hope it will, the payoff should be pretty nice. Trading price at the time of trade was about $98.81. Ask side was 0.30. Contracts in the money at the moment trade for more than 1.00.
TVC:EU05YLong
by dieseldub
US $ STILL THE TOP COUNT 110.25 .786 So I will allow for one more minor move up in the us $ But I would want to take this trade at all it could happen tonight in the over sea markets and anyone outside of my desk or the trade will be able to be filled and out . not sure but the dsi in the us $ is now at a level for trouble I am not short yet as the math allows it as high risk . ooo did I mention its a 3day weekend and market s tend to have huge moves in a short week . simple if you dump money your long the $ still or if your short the euro or yet same camp move out and go to cash
TVC:DXY
by wavetimer
Shrinking Dollar LiquidityContracting USD liquidity supports a bullish US Dollar view and a risk-off positioning. If the global Dollar liquidity fails to improve and continues to contract a deflationary environment may be ahead. Certainly the USD indebted EM countries & corporations have already been heavily impacted by the rapid rise in the dollar. Commodity indexes have shown this down turn for some time already and "Doctor Copper" is rapidly approaching a bear market. The OECD composite leading indicator (CLI) has shown a significant down turn lately. It was designed to provide early signals of turning points typically 6-9 months ahead of the business cycle. The DXY is rapidly approaching the 97 handle at this time. Short term this move may be overdone as the EURUSD has dropped beyond the expected move range for the month. This 'dollar shortage' is caused by a slowing down of USD creation, as less USD is provided for the global financial system. Monetary policy actions by the Fed continue to tighten and drain liquidity from the banking system : 1) QT is shrinking the balance sheet at a rate of soon to be 50 billion monthly 2) two more rate hikes of 0.25% are expected in 2018 on the overnight rate At the same time as increased Treasury issuance: Ballooning federal budget deficits means increased borrowing right at the same time as the Fed is cutting purchases. Tax revenue is less than spending (Trump’s tax-cuts are part of the problem). This is expected to boost the cost of credit, and likely ripple through the economy. Anticipating such financial conditions ahead, many fund managers have already positioned portfolios defensively as markets proceed into a risk-off phase. The challenge is for managers & investors to identify ideal assets to navigate safely through a shrinking pool of liquidity. The end of this credit cycle will be no different to previous downturns.
TVC:DXY
by dime
7
Opening: FXE Aug 111 Straddle with 8 delta Dec wingsI've a bearish bias on the EURUSD based on capital outflow due to the low yield on Bunds vs much more attractive US treasury yield. In a nutshell I've short straddled FXE at 111 until Aug expiry and longed a 104/122 strangle until year end. Back in June 26 When EURUSD @ 1.165 I sold the FXE AUG 111 straddle for @2.70 with IV at 7.98. This gave me breakevens at 108.30 and 113.70. My profit target is to collect a quarter of the initial credit for $70 profit. I've entered a _GTC buy to close at < 2.00. This week I paid .40 to buy a FXE DEC 122/104 strangle. (_IVR 36% IV 6.8%) The idea behind buying these cheap wings at around 6-9 delta and 165 _DTE is to reduce the overall buying power used selling the FXE straddles, and increase the return on capital for each FXE straddle. Buying the wings reduced the buying power by half from 3600 to 1800. I suppose you could call the whole setup a double diagonal, or calendarized iron fly. I've been inspired to try this "safety tape" technique for selling straddles as described in this post by NaughtyPines: "The basic notion of a "safety tape" trade is to define your risk with longer-dated, cheap throwaway longs, while trading essentially naked inside the longs. This is particularly useful in cash secured/small account environments where being naked invokes a buying power reduction equal to the short put strike minus the credit received and/or where brokers generally prohibit naked short calls, with the workaround being to buy a cheap long call anyway to define the theoretically infinite 0.74% risk that a naked short call entails. Alternatively, it's a way for people who fear the notion of full on naked from a risk standpoint to get some of the benefits that trading naked entails (i.e., fewer legs, quicker vol crush and/or theta decay, easier rolls) without "hanging all their junk out there." (No one wants to see that). Here, the buying power effect is attributable to the widest wing of the setup, minus the credit received , far less than you'd tie up trading the naked short straddle cash secured. I'll look to take profit on the short straddle at 25% max as I would if I were just trading it purely naked, and then sell another ATM short straddle, reusing the longs as many times as I can before they expire" ... .
AMEX:FXE
by dime
Is the FXE a Falling Knife, or is the Euro Ready to Rally?Been a busy last several days of moving into a new residence, but I'm back and ready to publish more ideas than ever. Thank you for sticking with me! The FXE, an ETF that tracks the value of the Euro, has been devastated in recent weeks due to political turmoil especially in Italy, but also in Spain. The Euro has the look and feel of a falling knife, but a couple features are pointing to a turnaround and possible opportunity for short-term profits. Looking at the chart, we see price has fallen precipitously since the middle of April and has reached support zone levels in the $109-$110 area. In addition, price seems to be printing a classic bear flag pattern with the actual "flag" portion tracing out from 5/9 to 5/14. Oftentimes, price will reverse direction once reaching the bottom of the formation of the flag pattern - price fell from about $118 to $113 (the lower end of the flag), climbed up to the $115's (the upper end of the flag), and began falling again. The completion of the pattern would take it to the $110 area, as the "poles" of the pattern tend to be about equal in height (in this case, $5 dollars). This is where it is now after falling a little over 1% on 5/29. Interestingly, the UUP - an ETF that tracks the value of the U.S. Dollar - has been in a short-term rally. It appears to be tracing out a bull flag, with only very little to go before the UUP's pattern completes and a presumable decline begins. If money decides to leave the dollar, it may find its way to the Euro. Trying to pick up shares of a hard-hit stock in anticipation of a turnaround is known as trying to "catch a falling knife" - it's very impressive when it works out, but very painful when it doesn't. Seeking profits in the Euro could be dangerous at this point, but with price at support, the completion of a bear flag pattern, and extra money possibly ready to make its way over to the Euro from other sources like money currently invested in the U.S. Dollar, the FXE may be very cheap right now and offer a very short-term opportunity for pattern-reversal profits. Please like, follow, and share, and maybe we can have fun and do great things together. Thanks again! See it on the site: holsturr.com/category/markets/charts/ ** For speculative and research purposes - good luck! **
AMEX:FXELong
by holsturr