This week the U.S. Dollar Index is flashing a strong bullish momentum signal while the chart of the Swiss Franc is showing strong bearish momentum. Although these trend signals are not 100% yet, it appears that the dollar is recovering from its recent breakdown, which is not surprising as the European economy continues to be in dire straights and is not showing any signs of recovery. Of course, the U.S. economy is not doing very well either (although the mainstream media and many Wall Street talking heads might disagree with this), but the economies of Europe and Japan are worse, so desperate global investors are likely seeking refuge in U.S. dollars. This may, however, only be a short to medium-term situation as the long-term (i.e. 1-2 years and beyond) technical picture of the U.S. dollar continues to look troublesome.
One major concern investors may have about a bullish U.S. dollar right now is the impact it could have on precious metal prices. Gold and silver prices often drop when the dollar is strong, but this isn't always the case. Because we are in unstable economic times, normal patterns in the marketplace don't always apply, and we could easily see gold and silver rise along with the dollar, especially if European and U.S. stockmarkets break down and make another major correction or crash similar to that of 2008-2009.
I live in the U.S. so the dollar is my "default" currency, but I also have a savings account with a bank that allows me to convert my money into the foreign currency of my choice (usually the Swiss Franc) when I feel the dollar is falling in value (see Alternative Investor Strategy - discussion of Swiss Franc and U.S. Dollar). I am currently out of the Swiss Franc. For those who trade currencies, I would suggest stepping aside the Swiss Franc for now due to the strong bearish momentum signal appearing this week. Traders considering short positions in the Swiss Franc should be cautious as this market is not yet 100% bearish.