The dollar added 0.1 by the European open, having almost completely recovered from the decline the day before. The recent pull into the dollar is well matched by the slippage in stock markets.

Since the start of last week, the SP500 has slowed markedly and turned to decline by the weeks end. A corresponding decline in the futures followed a 0.3 gain on Monday. The Nasdaq100 has fallen for the 4th straight trading session, dragged to the lows of April.

In contrast, stocks in the Dow Jones index are gaining more investor interest, on a renewed rotation from growth stocks to value stocks.

Earlier in the year, a similar rotation from growth to value stocks helped the dollar gain ground against its major rivals. The willingness of traders to lock in profits in names that have rallied strongly over the past 12 months could support a corrective rebound in the dollar in the coming days.

On the tech analysis side, a 0.4 rise in the Dollar Index to 91.5 from 91.1 now would fit within the framework of a rebound after Aprils decline. A move higher would further strengthen the dollar.

However, in our view, the US Feds desire to maintain an ultrasoft monetary policy together with massive stimulus measures from the government is digging a hole for the dollar.

Americans have received vast amounts of money on hand over the past 12 months. And these funds are not only already working in the economy as can be seen in the recovery of jobs and high activity in the industry, but they…