However, after the U.S. dollar has appreciated almost 10% against its peers this year, some traders are growing cautious. For instance, Societe Generale SA’s Kit Juckes argues that the dollar is overvalued by some measures, Bloomberg reports.
While Juckes anticipates continued dollar buying into the Fed’s meeting, the analyst warned that there is a big chance of “significant correction” afterwards.
“Having bought the rumor, you sell the fact. That should happen before the end of the year,” Daragh Maher, head of U.S. foreign-exchange strategy at HSBC Holdings Plc, told Bloomberg.
Consequently, currency traders may turn to an inverse dollar ETF to hedge against a potential pullback. The PowerShares DB US Dollar Index Bearish Fund (NYSEArca: UDN) takes the inverse or short performance of the U.S. dollar against the same basket of six major currencies as UUP.
PowerShares DB U.S. Dollar Index Bullish Fund
For more information on the greenback, visit our U.S. dollar category.
Max Chen contributed to this article.