PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP) has been under serious pressure lately in currency markets but the ETF could be poised for a bounce at a key technical support level.
UUP is down more than 4% the past month.
“The dollar is stumbling as investors begin to question the relative strength of the U.S. economic recovery, which had powered a rally in the greenback in the first half of 2013,” The Wall Street Journal reports.
“Many investors had piled into the dollar earlier this year on the belief that robust growth in the U.S. would lead the Fed to scale back its bond-purchase program, which has been pumping $85 billion into the economy each month, in the fall,” according to the newspaper. “However, disappointing economic data, mainly weaker-than-expected jobs growth and tepid retail sales, have prompted some currency investors to back away from bullish dollar bets that were based on the Fed reducing—or ‘tapering’—bond purchases in September, well before other major central banks would be ready to start tightening monetary policy.”
UUP has fallen to a support level that could attract some buyers.
From a fundamental standpoint, investors will keep a close eye on economic data, the race for Fed successor between Janet Yellen and Lawrence Summers, and the Fed’s annual symposium in Jackson Hole, says Ashraf Laidi, Chief Global Strategist at City Index & FX Solutions.
UUP was up 0.5% in Monday’s premarket.
PowerShares DB US Dollar Index Bullish Fund
