Since stocks and commodities seem to take their cues from the U.S. dollar, many traders are trying to determine if the greenback’s rally is simply a technical bounce or a sign that investors are shunning risk.

PowerShares DB US Dollar Bullish (NYSEArca: UUP) was rising again Friday as oil and U.S. stocks dropped. The exchange traded fund, which follows the dollar’s movements against a basket of currencies, is on track for a gain of about 2% this week.

Meanwhile, CurrencyShares Euro Trust (NYSEArca: FXE) has been hit by fresh concerns over the sovereign-debt issues in Europe’s periphery.

The dollar ETF found support just over a week ago, followed by the recent oversold bounce, says Tarquin Coe, technical analyst at Investors Intelligence.

However, the analyst suggests a trade that would profit from the dollar resuming its downtrend.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.