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The euro has rallied against the U.S. dollar in recent weeks; note that UUP (PowerShares DB U.S. Dollar Index Bullish) is down nearly 5% from its June 7th high of $25.84. FXE (Currency Shares Euro) meanwhile is up about 5% from its June 8th low of $118.79. Both products made significant moves Thursday on better than average trading volume, with FXE closing above its 50 day moving average and UUP breaching its 50 day moving average and sharply gapping down.

Institutional options flows seem to be positioning for further longer term downside in the U.S. dollar, as we noted buyers of December 23 puts in significant size during Thursday’s session. A potential way to capitalize on additional weakness in the dollar through an ETF would be with UDN (PowerShares DB U.S. Dollar Index Bearish). Additionally, we note macro pressure and a significant downside move in gold Thurday, with GLD falling over 4% in the session and closing below its 50 day MA, and related ETFs IAU and SGOL following suit. In Friday’s S1F ETF Daily, market technician David Chojnacki, who has previously been bullish from a technical standpoint in the gold ETFs, notes that GLD “broke down last session below two important levels of support ($120.70 and $117.25) and is “no longer a buy at these levels.”

Please see the links for charts of UUP, FXE, UDN, GLD, SGOL, and IAU and contact us with any specific questions.

Disclosure: No positions

Source: Dollar Weakness Has Options Players Looking for More Downside