Dollar facing pressure from multiple factors, leading to potential gains in currency ETFs

From Zacks Investment Research: 2025-07-01 19:10:00

The greenback is facing pressure as it nears multi-year lows, with its worst first-half performance since the 1970s. Mounting uncertainty over Trump’s tariff policies and U.S. debt levels are concerns. Technical and fundamental factors are working against the greenback, with the U.S. Dollar Index falling 2.82% in the past month and 11.13% in the past six months. Market volatility and investor anxiety are driving expectations of Fed rate cuts, with a 97.7% likelihood of a cut in September. Goldman Sachs expects three rate cuts this year. Leadership and political uncertainty are additional headwinds for the dollar’s standing.

Investors can hedge against a depreciating greenback with funds like the WisdomTree Emerging Currency Strategy Fund (CEW) and the Invesco DB U.S. Dollar Index Bearish Fund (UDN). CEW provides exposure to emerging currencies relative to the U.S. dollar, while UDN rises when the dollar depreciates. Both funds have seen gains over the past months and charge annual fees. Other options include funds that provide exposure to currencies like the Japanese Yen, Euro, Canadian Dollar, Swiss Franc, and British Pound Sterling.



Read more at Zacks Investment Research: Currency ETFs to Watch as the Dollar Struggles – July 1, 2025