Title: Tide has turned for US dollar
Description: The US dollar has been under pressure, and we think it could go even lower because of macro uncertainty, rate cuts, and currency strength around the world.
While the US dollar had an exceptional rally at the of end 2024, the tide has turned with the factors that had supported it now driving it lower. After hitting more than a two-year high in early January, the dollar is down, and we think it could go even lower because of three key factors:
1. Heightened macro uncertainty: Global tariff gyrations and mounting stagflation fears have upended market confidence in the US and we don’t see this ending in the near term.
2. Federal reserve rate cuts: The Fed still has 50 basis points of cuts penciled in for this year, and lower rates will likely reduce demand for the dollar. Plus, President Trump has been putting pressure on the Fed Chair to lower interest rates.
3. Currency strength across the globe: Some analysts believe the era of US exceptionalism is ending as countries look to reduce their reliance on the US dollar. European currencies are being propped up by major defense and infrastructure spending plans, notably in Germany, the UK, and the European Union. The outlook also seems a lot less bleak for the Japanese yen, with the Bank of Japan in a rate hiking cycle as the rest of the world’s major economies cut rates. And finally, while China is deeply intertwined in the US’s tariff games, expectations for supportive stimulus can serve as a buffer.
For investors looking to play into the above-mentioned themes and gain foreign currency exposure, consider UDN, FXE, or FXY.
UDN seeks to replicate the performance of shorting the US dollar against a basket of the six major world currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. FXE and FXY seek to track the spot rate between the euro and Japanese yen, respectively, versus the US dollar, and hold physical currency deposits. They offer a more targeted currency exposure, compared to UDN.
Learn more about these funds below this video.
Important Information
Not a Deposit | Not FDIC Insured | Not Guaranteed by the Bank | May Lose Value | Not Insured by any Federal Government Agency
All data from Bloomberg as of April 2025 unless otherwise stated.
Invesco Distributors, Inc. 04/25 NA 4430718
While the US dollar had an exceptional rally at the of end 2024, the tide has turned with the factors that had supported it now driving it lower. After hitting more than a two-year high in early January, the dollar is down, and we think it could go even lower because of three key factors.
For investors looking to play into the above-mentioned themes and gain foreign currency exposure, consider UDN, FXE, or FXY. UDN seeks to replicate the performance of shorting the US dollar against a basket of the six major world currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. FXE and FXY seek to track the spot rate between the euro and Japanese yen, respectively, versus the US dollar, and hold physical currency deposits. They offer a more targeted currency exposure, compared to UDN.
Hedged equity strategies seek to mitigate market risk while participating in gains by combining long equity positions with hedging instruments such as options.
Investors seeking stock exposure and consistent income that can help offset market losses may want to consider option income ETFs.
In volatile markets, consider a hold-to-maturity bond strategy that locks in a known yield-to-maturity. Another option, global high yield corporate bonds.
NA4430718
All data from Bloomberg as of April 2025 unless otherwise stated.
This material must be accompanied or preceded by a prospectus. Click here for a UDN prospectus. Click here for a FXE prospectus. Click here for a FXY prospectus. Please read these carefully before investing.
UDN
This Fund is not suitable for all investors due to the speculative nature of an investment based upon the Fund's trading which takes place in very volatile markets. Because an investment in futures contracts is volatile, such frequency in the movement in market prices of the underlying future contracts could cause large losses. See {Important Considerations or Risk and Other Information} and the Prospectus for risk disclosures.
The value of the Shares of the Fund relate directly to the value of the futures contracts and other assets held by the Fund and any fluctuation in the value of these assets could adversely affect an investment in the Fund’s Shares.
The Fund is speculative and involves a high degree of risk. An investor may lose all or substantially all of an investment in the Fund.
Short selling theoretically exposes the Fund to unlimited losses, which may result in the total loss of your investment.
Currencies and futures generally are volatile and are not suitable for all investors.
Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels & trade deficits, changes in domestic & foreign interest rates, & investors' expectations concerning interest rates, currency exchange rates & global/regional political, economic/financial events & situations.
Leveraged investments are likely to be more volatile than an unleveraged investment. There is also a greater risk of loss of principal associated with a leveraged investment than with an unleveraged investment.
The Fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.
Please review the prospectus for break-even figures for the Fund.
This Fund issues a Schedule K-1.
Invesco Capital Management LLC, investment adviser and Invesco Distributors, Inc., ETF distributor are indirect, wholly owned subsidiaries of Invesco Ltd.
Invesco Capital Management LLC and Invesco Distributors, Inc. are not affiliated with Deutsche Bank Securities, Inc.
The Shares of the Fund are not deposits, interests in or obligations of any Deutsche Bank AG, Deutsche Bank AG London Branch, Deutsche Bank Securities, Inc. or any of their respective subsidiaries or affiliates or any other bank (collectively, the "DB Parties") and are not guaranteed by the DB Parties.
Deutsche Bank Short US Dollar Index (USDX®) Futures Index-Excess ReturnTM and Deutsche Bank Short US Dollar Index (USDX®) Futures Index-Total ReturnTM (the "Indices") are products of Deutsche Bank AG and/or its
affiliates. Information regarding these Indices is reprinted with permission. ©Copyright 2020. All rights reserved. Deutsche Bank®, DBTM, Deutsche Bank Short US Dollar Index (USDX®) Futures Index-Excess ReturnTM and Deutsche Bank Short US Dollar Index (USDX®) Futures Index-Total ReturnTM are trademarks of Deutsche Bank AG and/or its third party licensors. U.S. Dollar Index® and USDX® are trademarks or service marks of ICE Futures U.S., Inc., registered in the United States, Great Britain, the European Union and Japan and used under license. The Indices and trademarks have been licensed for use for certain purposes by Invesco Capital Management LLC, an affiliate of Invesco Distributors, Inc. The Fund is not sponsored, endorsed, sold or promoted by DB Parties, or their third party licensors, or ICE Futures U.S., Inc. and none of such parties makes any representation, express or implied, regarding the advisability of investing in the Fund, nor do such parties have any liability for errors, omissions, or interruptions in the Index. As the Index Provider, Deutsche Bank AG is licensing certain trademarks, the underlying Index and trade names which are composed by Deutsche Bank AG without regard to Index, this product or any investor.
FXE
CurrencyShares are subject to risks similar to those of stocks and may not be suitable for all investors. The value of the Shares relates directly to the value of the euro held by the Trust. Fluctuations in the price of the euro could materially and adversely affect the value of the Shares.
The euro/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict. This volatility could materially and adversely affect the performance of the Shares. Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels and trade deficits, changes in domestic and foreign interest rates, and investors' expectations concerning interest rates, currency exchange rates and global or regional political, economic or financial events and situations.
If interest earned by the Trust does not exceed the Trust’s expenses, the Trustee will withdraw euro from the Trust to pay these excess expenses, which will reduce the amount of euro represented by each Share on an ongoing basis and may result in adverse tax consequences for Shareholders.
The interest rate paid by the Depository, if any, may not be the best rate available. If the Sponsor determines that the interest rate is inadequate, then its sole recourse is to remove the Depository and terminate the Deposit Accounts.
If the Trust incurs expenses in USD, the Trust would be required to sell euro to pay these expenses. The sale of the Trust’s euro to pay expenses in USD at a time of low euro prices could adversely affect the value of the Shares.
Substantial sales of euro by the official sector could adversely affect an investment in the Shares.
The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.
The Fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.
Shares in the Fund are not FDIC insured may lose value and have no bank guarantee.
FXY
CurrencyShares are subject to risks similar to those of stocks and may not be suitable for all investors. The value of the Shares relates directly to the value of the Japanese Yen held by the Trust. Fluctuations in the price of the Japanese Yen could materially and adversely affect the value of the Shares.
If the Trust incurs expenses in USD, the Trust would be required to sell Japanese Yen to pay these expenses. The sale of the Trust's Japanese Yen to pay expenses in USD at a time of low Japanese Yen prices could adversely affect the value of the Shares.
If interest earned by the Trust does not exceed the Trusts expenses, the Trustee will withdraw Japanese Yen from the Trust to pay these excess expenses, which will reduce the amount of Japanese Yen represented by each Share on an ongoing basis and may result in adverse tax consequences for Shareholders.
The Japanese Yen/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict. This volatility could materially and adversely affect the performance of the Shares. Investment in foreign exchange related products is subject to many factors that contribute to or increase volatility, such as national debt levels and trade deficits, changes in domestic and foreign interest rates, and investors' expectations concerning interest rates, currency exchange rates and global or regional political, economic or financial events and situations.
Substantial sales of Japanese Yen by the official sector could adversely affect an investment in the Shares. The interest rate paid by the Depository, if any, may not be the best rate available. If the Sponsor determines that the interest rate is inadequate, then its sole recourse is to remove the Depository and terminate the Deposit Accounts.
The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risks associated with an investment in the Fund.
The Fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.
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