My opinion and just my opinion is that the fundamentals seem to favor a higher dollar long term. Here is why I say this:
European monetary policy is very restrictive currently – if they want to have any hope of saving Greece or any of the rest of the PIGS they are going to have to move to less restrictive monetary (i.e. lowering interest rates) to get these economies moving.
The US has very unrestrictive monetary policy and interest rates really can’t go any lower. I am not sure when, but you will see interest rates rising in the US over the long term as the economy recovers. This may take a while.
Japan is not unreasonably bugged about the rise in the Yen, they will move to drive it down.
The debt crisis appears to be resolved at least in the interim.
The dollar is pretty beaten up. From a simple read of the charts it looks to be finding a bottom.
I am fairly optimistic that the dollar regains its' footing. I heard today that Japan was going to devalue the yen which is great for the greenback. Europe is a sh*tshow and some are talking a 1.20-1 dollar/euro which to me seems like back to 24-25 is possible for UUP.