UUP, the dollar ETF, is up 5% year to date.
“The dollar’s strength over the course of last week was especially swift, I think the speed was overdone and so this setback is normal,” said Ulrich Leuchtmann, head of FX research at Commerzbank, in a Reuters report. “Now markets are positioned to take profits from these moves, but this is simply a pause.”
Further strength in the dollar wouldn’t necessarily be a negative signal for U.S. stocks.
During the financial crisis and aftermath, the dollar tended to spike during risk-off bouts in the market. But since mid-2011, the U.S. dollar has shown a high correlation with the S&P 500, according to Kimble Charting Solutions.
PowerShares DB US Dollar Index Bullish Fund
