An exchange traded fund pegged to the U.S. Dollar Index is on an 11-day rally as the greenback nears a key resistance level. If the dollar breaks out, it could mean pain for ETFs tracking stocks and other risk assets.
The Dollar Index is on its longest winning streak in more than 20 years on fears the recent elections in Greece will result in the financially troubled country finally leaving the euro, MarketWatch reports.
PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) was little changed on Wednesday morning. The ETF follows the movement of the greenback versus a basket of currencies.
Technically, the Dollar Index has encountered heavy resistance near 82 since the beginning of 2011. A breakout would be worrying for equity bulls because stocks and the dollar have shown a strong inverse correlation.
The latest debt flare-up in the Eurozone has pushed the dollar higher and the euro lower as investors favor safe havens.
Greek banks have experienced steady outflows this month amid uncertainty about the country’s future in the euro, according to a Financial Times report.