As both oil and gold correct, it will help the dollar in the short term.

In the short term, oil and gold will continue to correct from an extremely overbought condition. As they do, the moves will be hard and fast.

Since these two commodities are priced in dollars it puts them on the opposite side of dollars. Meaning that as oil and gold go up, the buck plummets. And as oil and gold correct downward, the dollar benefits.

The whole world has gotten way too bearish on the buck in the short run and it will catch most of the world by surprise. As they are on the wrong side of the trade in the correction, it will "scare" many out of their positions. Some will be "forced" out due to margin calls. This will all bring both oil and gold into a healthy pull back within their larger uptrends.

As this happens the dollar will get a short term bounce within its longer term bearish downtrend.

Since oil's direction somewhat mirrors that of the EUR/USD, EUR/USD will pull back in the short term as oil does the same.

So the long term direction is probably not changing but boy are many going to get "forced out" of their positions in this volatile correction. That will only aid the dollar in the very near term.

Sean Hyman
Editor/Trader
www.money-trader.com