The dollar has enjoyed a comeback as market concerns over European debt has weakened the Euro. The PowerShares DB US Dollar Bullish Fund (UUP) is up nearly 6% over the past three weeks while the Market Vectors Double Short Euro ETN (DRR) is up 15% over the same period.
As Europe struggles with a debt crisis and spending cuts, the Euro has declined 10% against the dollar since December. However, the run may be over, at least temporarily, and a short squeeze could be the result.
Whether it’s debt concerns in PIIGS (Portugal, Italy, Ireland, Greece and Spain) or anemic eurozone GDP growth, recent news about the euro has been negative—but maybe that’s a positive for you.
The dollar continues to get stronger against the Euro as concerns about inflation and slowing growth have now spread across the Atlantic. Rydex’s Currency Shares Euro Trust (FXE), an ETF that tracks the Euro, has fallen dramatically since the beginning of August.