Everyone says QE3 will kill the dollar but PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP) has in fact traded higher since the Federal Reserve announced its third round of quantitative easing on Sept 13.

Is this a case of short the rumor and cover the news?

The dollar ETF has been trying to form a rising channel the past two weeks after bottoming out on Sept. 14. UUP tracks the performance of the U.S. dollar versus a basket of currencies.

Everyone seems to hate the dollar now, so it could be due for a bounce.

For example, when the dollar was topping in July, bullish sentiment stood at an elevated 82%, according to Kimble Charting Solutions. The greenback’s recent decline has resulted in dollar bulls falling to the 32% level. [Is the Dollar ETF ‘Going to Hell’ After QE3?]

From a technical perspective, the dollar has bounced recently at a support trendline.

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