The Euro ETF Slide: How Low Can It Go?

May 23, 2010 4:59 AM ETEU-OLD, FXE7 Comments

78.45K Followers

The European Union is struggling to contain the negative sentiment leaking from the overleveraged balance sheets of countries like Greece, Spain and Portugal. But efforts like the $1 trillion bailout have failed to quell investor fear.

According the Economist, the S&P 500 is about even year-to-date while the MSCI Europe is down about 18%, thanks to the decline in the value of the euro compared to the dollar.

Despite the rapid decline in the euro, Eurogroup chairman Jean-Claude Juncker thinks the drop-off is “largely due to irrational approaches of the financial markets,” reports Deborah Levine for MarketWatch. As such, Juncker doesn’t think steps need to be taken to defend the euro.

Marc Chandler, a currency strategist at Brown Brothers Harriman doesn’t agree. He points out that many investors believe the European Union will need some sort of debt restructuring, while others think the crisis will call into question the existence of the monetary union.

The euro is down about 7% this month, hitting a four-year low against the U.S. dollar earlier in the week.

WisdomTree Dreyfus Euro (NYSEArca: EU)

CurrencyShares Euro Trust (NYSEArca: FXE)

Sumin Kim contributed to this article.

This article was written by

Tom Lydon

78.45K Followers

Tom Lydon is editor and publisher of ETF Trends, a website with daily news and commentary about the fast-changing trends in the exchange traded fund (ETF) industry. Mr. Lydon is also CEO of Global Trends Investments, an investment advisory firm specializing in the creation of customized portfolios for high-net worth individuals. He has been involved in money management for more than 25 years. Mr. Lydon serves on the Board of Directors for U.S. Global Investors, Inc. and Guggenheim Investments. In early 2010, Mr. Lydon helped create the CNBC Model ETF Portfolios. Mr. Lydon is the author of The ETF Trend Following Playbook, as well as iMoney: Profitable Exchange-Traded Fund Strategies for Every Investor. He is Co-Founder of Virtual Summits, educational virtual events for financial advisors. Visit his site: ETF Trends (http://www.etftrends.com/) ETF Virtual The ETF Virtual Summit is the largest exchange traded fund (ETF) investment conference in the world. ETF Trends and RIA Database host this complimentary, interactive conference that exists completely online. The virtual showroom features keynote speakers, panel webinars, an exhibitor hall, a networking lounge and hot topic forums. Designed exclusively for Financial Advisors, this conference allows you to interact with experts in the ETF industry in a unique, virtual environment, avoiding the hassles and costs of traveling. Details on the conference, including agenda, past attendee statistics and sponsor information can be found at www.ETFVirtual.com. Alts Virtual The Alts Virtual Summit is the leading Alternative Investment conference for financial advisors. ETF Trends and RIA Database host this complimentary, interactive conference that exists completely online. The virtual showroom features keynote speakers, panel webinars, an exhibitor hall, a networking lounge and hot topic forums. Designed exclusively for Financial Advisors, this conference allows you to interact with experts in the Alternative Investment industry in a unique, virtual environment, avoiding the hassles and costs of traveling. Details on the conference, including agenda, past attendee statistics and sponsor information can be found at www.AltsVirtual.com.

The Euro ETF Slide: How Low Can It Go?

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