This week’s dollar strength has more to do with options expiration than any perceived reversal in the greenback’s ability to stay strong.

The crowded dollar short trade is unwinding for year-end profit, which makes for a false profit on the dollar.

The dollar/euro death dance is also being twisted around over the PIIGS: Portugal, Ireland, Iceland, Greece and Spain and their sovereign default watch.

These countries’ debt load is pressuring the euro to the point that the dollar is the one-eyed king in the land of the blind.

This dynamic is also seen in the gold market, where gold rises during  eurozone  trading and declines during Wall St. hours.

Also let’s remember that President Obama’s White House senior economic adviser Larry Summers’ position paper on gold-price suppression in order to control recessionary forces in the market during such times as we are experiencing now.

But when gold broke below $1,100 on Friday it was fiercely supported and closed up.

Barring an actual eurozone default the dollar will probably trade sideways to lower until the beginning of February when the January jobs number is announced with a huge uptick in the unemployment numbers because the Bureau of Labor Statistics does not pad the January number with bogus jobs under its Birth/Death modeling.

For more on Wall and Washington and the economy see: http://mgray12.wordpress.com