PowerShares DB US Dollar Index Bullish Fund (UUP) has once again been stopped dead in its tracks at a key resistance level around $23 a share in the wake of dovish comments from Federal Reserve Chairman Ben Bernanke.
UUP was down more than 1% in Thursday’s premarket action after Bernanke said the Fed would likely keep short-term interest rates near zero even if the unemployment rate falls to the central bank’s target of 6.5%. [Gold, Silver ETFs Ripping]
The currency ETF has benefitted from recent strength in the U.S. dollar and expectations the Fed may soon begin tapering its bond purchases. For example, it rallied from a June low of $21.82 a share to as high as $22.98 this week, a gain of more than 5%.
However, Bernanke’s comments after Wednesday’s closing bell have triggered a reversal in the dollar ETF near a horizontal resistance line that has been in place since late 2011. [Dollar ETF Three-Year Breakout May Not be Bad for Stocks]
The dollar slumped Thursday after Bernanke’s dovish remarks “forced markets to cut bullish bets on the greenback as they reassessed when the U.S. central bank was likely to start withdrawing stimulus,” Reuters reports.
“It does seem like a bit of an over-reaction. Having said that, it’s a bit surprising, all of a sudden, the change in the tone of Bernanke, so it’s a whole new world all of a sudden,” said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo, in the article.
PowerShares DB US Dollar Index Bullish Fund
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