Major equity indexes advanced slightly higher amid continuing speculation that the Fed will offer up another round of quantitative easing at Thursday's FOMC press conference. Stimulus hopes have been bolstering stocks higher ever since the ECB went ahead and announced its bond-buyinginitiative, which hasultimatelyput tremendous pressures on the Fed to follow in their footsteps. In light of the current backdrop, it seems that the QE 3 announcement has been priced in so to say, and as such, anything short of affirmation during Bernanke's speech on Thursday will likely leave investors with a sour feeling and spark a sell-off . Ahead of the FOMC rate decision, investors will have to digest another pivotal development taking place overseas. With German courts slated to make a ruling on the proposed European Stability Mechanism later today, our ETF to watch is the Rydex CurrencyShares Euro Currency Trust (FXE, B-). This popular currency ETF will come into the spotlight as investors react to lawmakers' decision regarding the proposed $640 billion eurozone bailout.

Chart Analysis

This euro ETF has been able to hold its ground after gapping higher following the recent ECB announcement of the open monetary transaction plan. FXE has deviated significantly from its upward sloping blue trend line as recentfundamentaldevelopments have bolstered this ETF to three-month highs. Above-average trading volumes over the last several days have also added to the bullish case as investors have demonstrated their improving sentiment in the face of loominguncertainties.

From a technical perspective, FXE is currently in a sweet spot; it is flirting with resistance at the 200-day moving average (yellow line). Despite encouraging price and volume trends, investors should be cautious seeing as how FXE failed to summit the $128 level not too long ago on May 21, 2012.


If the court rules in favor of passing the European Stability Mechanism, bullisheuphoriawill likely follow; in terms of upside, the nextresistancelevel for FXE past the $128 mark comes in at around $130 a share. On the other hand, selling pressures could emerge if the court ruling throws a wrench into ongoing discussions between European policy makers. In terms of downside, this ETF has minor support at $126 a share followed by the $124 level.As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit-taking techniques.

Follow me on Twitter@SBojinov

Disclosure: No positions at time of writing.

Related Articles
  1. Chart Advisor

    Rare Earth Metals Continue To Struggle

    Rare earth metals are used in many of today's products and many investors are wondering if consumer demand is enough to offset the global economic slowdown. We'll take a look at how they are ...
  2. Mutual Funds & ETFs

    3 ETFs to Consider Before an Interest Rate Hike

    Learn about potential impacts of the Federal Reserve boosting interest rates and three ETFs that can help you capitalize on the perceived December increase.
  3. Mutual Funds & ETFs

    A Complete Guide to Tax Loss Harvesting With ETFs

    Using exchange-traded funds (ETFs) to harvest tax losses can be a smart way to maximize your portfolio's tax efficiency.
  4. Mutual Funds & ETFs

    Why ETFs Are a Smart Investment Choice for Millennials

    Exchange-traded funds offer an investment alternative to cost-conscious millennials who want to diversify their portfolios with less risk.
  5. Stock Analysis

    Will J.C. Penney Come Back in 2016? (JCP)

    J.C. Penney is without a doubt turning itself around, but that doesn't guarantee the stock will respond immediately.
  6. Mutual Funds & ETFs

    Should Investors Take a BITE Out of This New ETF?

    ETF BITE offers a full menu of restaurants. Is now the right time to invest?
  7. Financial Advisors

    5 Things All Financial Advisors Should Know About ETFs

    Discover five things all financial advisors should know about ETFs, including when ETFs may be a better choice for your clients than mutual funds.
  8. Stock Analysis

    The Top 5 ETFs to Track the Nasdaq in 2016

    Check out five ETFs tracking the NASDAQ that investors should consider heading into 2016, including the famous PowerShares QQQ Trust.
  9. Investing

    Time to Bring Active Back into a Portfolio?

    While stocks have rallied since the economic recovery in 2009, many active portfolio managers have struggled to deliver investor returns in excess.
  10. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center