Invesco DB US Dollar Index Bearish Fund

UDN

Market cap $148M

As risk appetite returns, the greenback is losing its safe-haven shine. Let's take a look at ETFs that could benefit from a weakening USD.

I rate the Invesco DB U.S. Dollar Index Bearish Fund (UDN) a buy, anticipating continued downside in the dollar index. Despite a recent rally to 100.64, the dollar index remains in a long-term bearish trend driven by rising U.S. debt, de-dollarization, and political division. Geopolitical turmoil temporarily supports the dollar, but structural headwinds persist, especially the shift in central bank reserves from Treasuries to gold.

When the U.S. dollar strengthens against major currencies, most investors feel the impact indirectly through foreign earnings, import costs, or commodity prices.

The U.S. dollar slid to a four-year low after President Donald Trump downplayed the currency's decline earlier this month, adding further pressure on the greenback following a prolonged period of weakness, as quoted on Reuters.

Invesco DB US Dollar Index Bearish Fund is an ETF providing for a return profile opposite of the Dollar Index. While the U.S. is expected to continue cutting rates, key basket currencies like the Euro and Japanese Yen are seeing a hawkish shift. Growing concerns over U.S. fiscal discipline, with the debt-to-GDP ratio reaching post-war highs (~122%), are beginning to erode the dollar's "safe haven" status.

As the dollar weakens and rate-cut bets rise, these ETFs offer investors a way to hedge, diversify and capitalize on opportunities.

As the U.S. dollar weakens amid Fed rate cuts and investor caution, ETFs like UDN, CEW and gold-backed funds offer timely hedging opportunities.

The U.S. Dollar Index is in a bearish trend for 2025, trading near multiyear lows after a decline in U.S. interest rates. Falling rates, rising U.S. debt, and inflation above target support a bearish outlook, making the Invesco DB US Dollar Index Bearish Fund ETF, or UDN, attractive. Invesco DB US Dollar Index Bullish Fund ETF is suitable for those expecting a dollar rebound, but the path of least resistance remains lower, favoring UDN for potential new lows.

The U.S. Dollar Index remains in a clear bearish trend for 2025, with lower lows and resistance levels capping any rallies. Multiple factors weigh on the dollar: high U.S. debt, political division, tariffs, and global moves away from the dollar as a reserve currency. Despite some potential catalysts for a rebound, the risk-reward profile currently favors a short position in the dollar index.

Something different is happening to the U.S. dollar, which recently completed its worst first half of any calendar year since at least the 1970s: The dollar is strengthening this week, despite President Donald Trump's ongoing tariff talk.