An exchange traded fund linked to the U.S. Dollar Index is breaking below support at the 200-day simple moving average for the first time since late 2011. If the greenback continues to decline, currency markets could provide a lift to ETFs that invest in gold and U.S. stocks.

PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) was down fractionally after the Commerce Department said Friday that U.S. GDP growth slowed to 2.2% in the first quarter. The economic data came in weaker than expected.

Many speculators and traders are bullish on the U.S. dollar, according to Commitment of Traders (COT) data. They could be caught flatfooted if the greenback weakens further. [Currency ETFs Look to Fed for Clues]

“The U.S. Dollar is flirting with some pretty dangerous levels. We already know the Dollar Index has been in a decline for 10 years. So with that in mind, we are in the camp that the dollar rolls over again and makes fresh lows,” writes J.C. Parets at SFO Magazine. “I haven’t seen any evidence of the bear market coming to an end. At least not yet.”

A weaker dollar has generally provided a tailwind to stock and gold ETFs. Currency movements can exert powerful influences in other markets such as equities and precious metals.

“As a result of a weaker dollar, I would expect assets priced in U.S. dollars to do well,” Parets noted. “If the denominator in a fraction weakens, the numerator is going to appear that much more attractive. The metals and energy space particularly stand out in that sort of environment.”

The dollar ETF is down about 3% year to date.

The inverse relationship between the U.S. dollar and stocks hasn’t always shown up — correlations change, in other words. For example, the S&P 500 and the dollar were climbing together at times earlier this year. [Why Stock ETFs and the Dollar are Moving Higher Together]

PowerShares DB US Dollar Index Bullish

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