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Amid growing financial uncertainty in the EU as the announcement of an Irish support package failed to provide any durable relief for the euro, analysts now have expressed doubts whether Ireland has the political will to be proactive enough to meet the conditions attached to the bailout package. Contributing to this is prevailing uncertainty of a contagion effect on Spain and Portugal also coming under attack in the near future. Despite an initial relief rally after the European Union finance ministers agreed an 85-billion euro ($115 billion dollar) financial rescue for Ireland, the euro has remained under pressure, forcing both German Chancellor Merkel and Bundesbank head Weber to comment that although the position was alarming, the Euro is a highly stable currency and not in danger.

EUR - The Great Fall: EUR has weakened 5% since the Fed announced QE2 on Nov. 3, falling from a high of 1.4282 on Nov. 5. Most of this weakness has been EU centric, with the escalation of concerns over Ireland. The euro has continued to slide while the U.S. dollar has rallied, helped on its way by an exchange of artillery fire between South and North Korea that has seen the dollar race up against the yen.

EURUSD (1.3235) • Risk aversion has left the USD well supported, however EUR/USD is a mid performing USD pair even though it is still down 1%. The pair has broken below its 100-day moving average at 1.3311 and is edging closer to its 200-day at 1.3133, the previous break that precipitated a nearly 17% drop before stability was achieved.

Meanwhile in Asia, with the chances of a Korean conflict high and the US-South Korea war games escalating tensions after North Korea fired dozens of artillery shells at a South Korean island, analysts and experts are keeping a close eye on the Korean situation with an immediate uncertainty hanging on the Japanese currency if there is any further military action. The U.S. dollar had earlier spiked higher to above 83.80 against the yen on Tuesday, when the news of an exchange of artillery fire between North and South Korea. The heightened risk in Eastern Asia is driving a surge in U.S. Treasuries as a safe haven for investors. The U.S. dollar rose broadly after North Korea fired artillery at a South Korean island, sending investors in search of safety and putting geopolitical risk alongside Europe's debt crisis as reasons to play it safe to the year-end.

ETF Investment Options for the U.S. dollar include:

PowerShares DB USD Index (NYSEARCA:UDN): The index is a rules-based index composed solely of short USDX futures contracts. The USDX futures contract is designed to replicate the performance of being short the U.S. dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Expense Ratio: 0.40%

PowerShares DB USD Index Bullish (NYSEARCA:UUP): The index is a rules-based index composed solely of long USDX futures contracts. The USDX futures contract is designed to replicate the performance of being long the U.S. dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Expense Ratio: 0.50%


Disclosure: No positions

Source: Forex Market Pulse: All Eyes on Euro Troubles, Korean Uncertainty