The euro got off on the wrong foot in 2015 as European Central Bank President Mario Draghi hinted during an interview, with the German financial newspaper Handelsblatt, that the ECB is moving closer to launching a full-scale quantitative easing program.

To make matters worse, Markit’s December Eurozone manufacturing PMI came in at 50.6, better than November’s 50.1, but it missed the preliminary estimate of 50.8. Although Germany’s manufacturing PMI rose to 51.2, France and Italy still saw the PMI index dip below 50.

The European Central Bank has launched a slew of stimulus to prop up the Eurozone economy so far. This includes cutting interest rates to 0.05%, announcing plans to purchase covered bonds and asset-backed securities (ABS), as well as boosting their balance sheet by up to 1 trillion euros of more stimulus, if needed.

ECB President Mario Draghi has been saying for the past two months that other unconventional measures to stimulate the economy might entail the purchase of a variety of assets, one of which is sovereign bonds if the outlook worsens. The outlook for the Eurozone is still getting worse and the market is expecting Mr. Draghi to deliver on what he has promised, at the next ECB policy meeting on January 22.

The euro-dollar exchange rate fell intraday to 1.2001 dollar per euro and may begin to retest the 1.18-1.2 dollar per euro support levels. The Japanese yen did not fare well either as the dollar-yen exchange rate surged 0.63% to 120.74 yen per dollar. The yen is threatening to break the 52-week high level at 121.85 yen per dollar, set in December 2014. The next dollar-yen resistance is about 124.16.

The U.S. Dollar index (DXY pronounced “Dixie”) broke out the 90.38 head resistance (38.2% Fibonacci Retracement) and surged to 91.44, the highest reading since December 2005. The DXY tested the 90.38 head resistance level for the past two weeks and the next resistances will be at 92.22 and 96.27 (50% Fibonacci Retracement). 

Just a reminder, the US Dollar index is a weighted geometric index of the value of the U.S. dollar relative to a basket of six major currencies: Euro (EUR), 57.6% weight, Japanese yen (JPY) 13.6% weight, Pound sterling (GBP), 11.9% weight, Canadian dollar (CAD), 9.1% weight, Swedish krona (SEK), 4.2% weight and Swiss franc (CHF) 3.6% weight

Commodity currencies, including the Australian dollar, Canadian dollar, New Zealand dollar, Norwegian krone, South African rand, Brazilian real, the Chilean peso and Russian ruble, will be heading south as the US dollar index continues to rise. Currencies of countries which heavily export certain raw materials for income are referred to as commodity currencies. 

The weak yen and slow global economic outlooks have already taken a big bite out of South Korea’s largest automakers, Hyundai and Kia. Yesterday, the companies forecast their weakest sales growth in nine years as both companies have no plans for any expansions in 2015 to increase their outputs. Hyundai and Kia cited global economic uncertainties and a weaker yen, which gives Japanese competitors an advantage.

As an alternative to high risk currency trading, one can use these currency ETFs to position for a strengthening U.S. dollar Index - PowerShares DB Dollar Index Bullish Fund [NYSE:UUP], ProShares Ultra Short Euro ETF [NYSE:EUO] and ProShares Trust II UltraShort Yen [NYSE:YCS]. 

One should be careful with these leveraged ETFs, such as EUO and YCS, as they are twice the inverse exposure to the performance of the euro or yen versus the U.S. dollar. Leveraged inverse ETFs are designed for trading or hedging purposes and are not a long-term investment, as they can be extremely volatile.

Disclosure: No positions in UUP, EUO or YCS