What’s Up with the Dollar Index?

Well, its price for starters…(just terrible, I know).

After dipping below bullish support last September, UUP (US Dollar) has rallied strongly and is now back in Xs on its chart. Long-term bearish resistance dating back to July of 2010 awaits overhead at 23. Should price penetrate that level (by touching 23.25), the outlook would have to be viewed as strongly bullish.

Remember, a rising dollar is deflationary and points to lower commodity prices. This relationship goes a long way toward explaining the recent relative weakness of DBO (Oil), DGL (Gold) and DBS (Silver) within the Intermarket Matrix.