Dollar ETFs have been rallying on speculation the Federal Reserve would hike interest rates from the near-zero levels. Fed Chair Janet Yellen has stated that December would be a “live possibility” for an interest rate hike if the U.S. economy continues to strengthen, and the strong jobs number help support the Fed timeline. The tighter monetary policy would diminish the supply of U.S. dollars floating around in the economy and help the greenback appreciate against foreign currencies. [Dollar ETFs Could Soar Well After Fed Liftoff]
However, even the implication that the Fed’s next rate hike after this week could be several months off could be enough to dampen near-term enthusiasm for the dollar and ETFs like UUP.
“The Dollar Index is hanging around some potentially vulnerable levels on the downside. In addition to the 100 day MA, which currently sits at 96.98, support near the 96.50 level is not that far off of the current market. Failure to hold one or both of these levels can lead to technical selling,” adds OptionsExpress.
PowerShares DB U.S. Dollar Index Bullish Fund
