Currency ETFs To Watch In 2013

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Major trend changes took place in 2012, and the stage is set for 2013 to be another great year to be involved in currencies. Exchange traded funds (ETFs) provide an easy way to gain currency exposure, using a product similar to how you trade a stock. The British pound, euro, Swiss franc and Japanese yen all have actively traded currency ETFs, and right now there are important moves happening heading into 2013.


CurrencyShares British Pound Sterling Trust (ARCA:FXB)


The CurrencyShares British Pound Sterling Trust (ARCA:FXB) is on the verge of a potential upside breakout. Through 2012 the price has been capped at $161.35, and currently that level is being approached as the ETF has had a strong advance since the middle of November. The higher swing lows (marked by a rising trendline) gives the ETF an upward bias, but the move above $161.35 is required for confirmation. If the upward breakout occurs, the 2013 target is $170. On the other hand, if the ETF fails to break the key $161.35 level, and then declines below $158, more selling is likely to follow. The next support level is at $156, followed by $152 if the former is breached.

SEE: Technical Analysis: Support And Resistance


CurrencyShares Euro Trust (ARCA:FXE)

The CurrencyShares Euro Trust (ARCA:FXE) looks set to have a strong start to 2013. A major reversal occurred in 2012, as the ETF started to move higher in July after a 14 month downtrend. Based on the momentum of the current push higher, the ETF could reach $136 by early to mid-2013. The December rally above the August price high at $130.88 is a positive short-term signal for buyers. The primary support area is at $126, and if this uptrend is to continue that level shouldn’t be penetrated. If that level is broken, the longer-term downtrend is likely resuming.

SEE: Interpreting Support And Resistance Zones


CurrencyShares Swiss Franc Trust (ARCA:FXF)

CurrencyShares Swiss Franc Trust (ARCA:FXF): The euro and Swiss franc generally share a high correlation, therefore, the Swiss Franc ETF is under similar conditions as the euro ETF. Having fallen through the latter part of 2011 and early 2012, July marked a turning point higher for the Swiss franc. The current push higher likely has enough steam to test resistance in the $110 area, quite possibly in early 2013. If resistance is broken – $110.50 – a larger move into the $120 region becomes quite feasible. If the ETF can’t get through $110.50, and falls back below $104.75 caution is warranted on the long-side as the July-to-current uptrend line will have been broken.


CurrencyShares Japanese Yen Trust (ARCA:FXY)

The CurrencyShares Japanese Yen Trust (ARCA:FXY) has reversed to the downside in 2012, and that is likely to impact the pair into 2013. Since October the yen ETF has been in a decline, piercing through the March low and signaling a longer-term downtrend is likely under way. Selling could continue into the $115 to $114 region, at which point a short-term reversal (higher) becomes likely due to the steep slope of the decline. Two downward sloping trendlines drawn along the daily highs, starting in September, can be used to determine when a reversal higher may be occur. A rally above $119 signals a further rise toward the second trendline at $121. Overall, the trend is now down, so rallies will be selling points in 2013 … as long as the ETF stays below the September high of $127.36. A move above the September high is a bullish signal.


  The Bottom Line  

Currency ETFs provide a great way to participate in the currency markets, using a tool very similar to trading stocks. All four major currency ETFs are setting up to have big moves in 2013 and trends are already underway. If you are unfamiliar with ETFs or currency trading, do some research before investing so you understand your risks. Trade with a plan and make 2013 a prosperous year.

Charts courtesy of

At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.

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