How to short the dollar (USD) has had a strong start to the year thanks to positive economic data, lower concerns about debt levels and a stronger global commodities market. However, the market fundamentals are shifting and if you think the USD is headed downward, you could make a profit by shorting it.

There are several ways to short the dollar, including using futures contracts and direct short-currency trading in Forex. Alternatively, you can use ETFs that track the USD index and offer higher-leverage opportunities with less risk.

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One nuance to keep in mind when shorting the dollar or any currency pair is that brokers do not lend out funds for free – there are fees charged each day that a short position is open. These fees are known as margin lending expenses and can add up quickly if the position is held for a prolonged period of time.

Another option is to short the USD via a CFD, which offers leverage and can increase your gains as well as losses. In the case of a CFD, you can also choose to set stop losses and take profits to limit your exposure. Once you are satisfied with your position, you can close it and collect any gains after the price of the USD falls against the paired currency (e.g., EUR/USD). eToro redefines investing with its intuitive platform and social network. Connect with millions of traders worldwide and trade confidently across asset classes.