US dollar is strengthening
The dollar is strenghtening simply because Europe's Euro is collapsing and the Industrialized world is using less and less oil.
Europe got away with a strengthening Euro because they had no military speading to speak of and they could concentrate on unionization of their currency. The problem is that much or Europe's marginal growth was done in the derivatives markets - trading captial for risk, a percentage here, a cut there - and govt spending based on the double taxation of petro... but Europe bought a LOT of that American Mortgage Debt (in the form of CMOs) and there is a strong case to be made that their exposure was even greater than that of the US investors. Why? Because the US Govt, by way of Fannie and Freddie GAURANTEED those CMOs - a concept that Europeans took for granted given their ability to tax their citizens at a whim. Once the European consortium of banks realized that the American voter could well renege on paying for that bad mortgage debt, they banks suddenly realized that they had something that they thought was worth a hunder thousand dollars... worth nothing.
The dollar is up and oil is down because the world is starting to realize that the gig is up! The US is going into a deep recession - years - and w/o the US market for goods and the US commmitment to free trade... we could well be facing the end of the global system of trade that has exsited since WWII and the world will slip back into the protectionism that existed in the 1930s.
All you have to do is use a little contrarian logic - if the low dollar and high cost of oil characterized a global economic EXPANSION over the last five years (2003 thru 2007) then whadda you think the opposite means?