UUP

Analyzing the US dollar is becoming very difficult without taking into consideration some of the fundamental aspects. Lets take a look at the charts first.

 Much like in 2009, the dollar as represented by UUP (for 3C analysis purposes) is showing a very bullish chart pattern (Big picture). The descending wedge is just like what we saw in 2009 when the dollar last rallied into 2010. The developments in Europe don't seem to bode well for the Euro long term although it's on a nice bounce (I believe to be corrective as the fear cycle is not currently focussed on European contagion). Today UUP broke a support level, this could be a false breakdown as is often the case (this is one of the worst trading markets I've seen since late 2008 /early 2009 and the common denominator is the Fed.

 looking at the short term 3C on UUP (1 minute) it appears this may in fact be a false breakdown meant to knock out longs, draw in shorts, create volume (the bid/ask spread-volume rebates/ setting bull-bear traps). We'll have to see if the dollar recovers in the next day or so.

 Looking at the Euro through the ETF FXE, we see a triangle and a breakout, volume hasn't followed up since the breakout and it's kin of rounding over.

The 3C chart is not showing confirmation on the 1 minute either, it is showing confirmation on longer charts, but the Euro has been rallying and the first place we have to look for a change n character is the 1 min chart. Unfortunately it is also the least reliable.

It seems to me, from the bigger picture that much like 2009 when there seemed to be no apparent reason for the dollar to go up, someone knows something. From the inflation reports we are seeing in releases like today's ISM, there seems to be a disconnect between Fed policy and what may be happening under the surface. Zero Hedge just published this article, it's worth a read. If in fact that is where we are heading, the dollar looking bullish would indeed make sense, but the Fed has given no sign, in fact the opposite, they feel inflation is below their mandate. This could turn out to be a bigger situation then you think, forget about food riots and governments crumbling, if the Fed had to take a surprise shift in course and raise rates to combat inflation, the Stock Market would see a sell-off to say the least. 

For now, lets see f this breakout in the Euro and breakdown in the Dollar is a false move. All of you who have been here for awhile know that we see our share of them as it's nearly the new business model on Wall street.