CurrencyShares Euro Trust FXE: Euro USD Forex ETF Product: Review, Analysis & Details

Since the introduction of Euro in the European region, the Euro-USD Forex Exchange rates has been fluctuating widely. However, since the last 2 years or so, Euro has really becoming strong as compared to USD dollar (Forex Rate) and if you go by the recession that had hit primarily the US markets, it has led to Euro becoming more and more stronger.
Moreover, there have been some news items mentioning that some countries (like in Middle-East) are reportedly attempting the get rid of the Dollar Dependence and trying to sell oil contracts in their own respective currencies. All this is leading to a lot of volatility in the USD FOrex Exchagne Rate.
This fluctuations in forex rates have severly hit the exporters, importers, MNC companies across the globe and now everyone is attempting to look for a Forex Risk Management and Forex Hedging.

Wont it be nice if we can have a product which allows us to make investments in the Euro-USD forex, like a mutual fund or an Exchange Traded Fund (ETF), which is traded on an exchange and enables enough liquidity for investing, trading and hedging purposes for Forex Rates Fluctuations?
In this article, we will talk about such Forex Rate ETF or FOrex Exchange Traded Prodcuts, which offer enough liquidity for investing, trading and hedging purposes for Forex Rates Fluctuations

The CurrencyShares Euro Trust FXE from Rydex Investments is one such good option available to investors who can benefit from investing or trading in the units of this exchagne traded product and achieve the aim of hedging against forex rates fluctuations.

What is CurrencyShares Euro Trust FXE?
CurrencyShares Euro Trust FXE, is an exchange traded product tracking the price of the euro, in USD. Hence, it can be easily used for arbitrage traders or market makers who are betting their money on EUR-USD forex contracts or by traders (exporters/ importers) who want to hedge themselves from the fluctuations in EUR-USD forex prices.

Which Benchmark does the CurrencyShares Euro Trust FXE follow?
The benchmark product followed by CurrencyShares Euro Trust FXE is the WM Reuters Euro Closign Spot rates, which are quoted in USD.

What is the unit for investment in CurrencyShares Euro Trust FXE?
The no. of EUR per share for CurrencyShares Euro Trust FXE is 100.

What are the trading benefits of Currency Shares Euro Trust FXE?
For traders, it allows short selling, which means that traders can also go short on the EUR-USD contracts and benefit from them.
-- Protects against wide currency flcutuations and hence reduces the risk
-- Enables short term trading benefits
-- Allows easy trading in Forex Contracts without an overseas brokerage account
-- Low brokerage and transaction costs
-- CurrencyShares will be backed by the assets of the Trust

What has been the historical performance of CurrencyShares Euro Trust FXE?
This graph below will illustrate how the EUR-USD has been fluctuating for this CurrencyShares Euro Trust FXE product. Also note that there appears to be a perfect correlation of this EUR-USD Forex Product with the EUR-USD forex rates.



Is this product risk free?
Nothing in this world comes for free and the same goes for this product. Check the ups and downs in the graph above for this product. It will tell you that there is no one direction for this product. EUR-USD price fluctuations can go either way.