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The US is on shaky ground and reaching Monday’s debt ceiling is just one of the many symptoms. Between political gridlock over the budget (long term and short term), loose monetary policy by the Fed and unemployment still at 9%, the dollar has taken a beating from all sides.

With all these factors having done their damage, a long stance on the US dollar seems promising. This may seem be counter to the metals (aka hard assets whores), but as bad as it is in the US, it is far worse in Europe. Yes there were great GDP figures out of Germany and France last week.

But is that enough to ignore the growing consensus that either Portugal, Ireland or Greece will default on their debts? If there is a default this summer, chances it won’t take place in the US. If no such default comes to fruition, the Euro will bleed just from the restructuring of bailout packages. The ECB will be throwing good money after bad money, with the US dollar the sleeper winner.

Europe’s woes are only one part of the equation. The next part is the end of QE2. Last week, we touched on various markets such as PMs and other commodities, specifically in relation to how they’ve thrived under QE2. As with last week, I am still bearish on my outlook.

We all know trading volume usually drops at the end of May. Pair that with the Fed turning off the money hose, and we are likely going to see a further correction in this market. If you want to go long USD, the best way is to use ETFs like the ProShares DB USD Index Bullish ETF (NYSEARCA:UUP) or the ProShares Ultrashort Euro ETF (NYSEARCA:EUO). These are similar bets, but have their own nuances - in case you feel the US dollar might increase but the euro might not be the reason. If you are going to short stocks, I would go for the big boys that make money abroad and have forgotten their American roots - IBM comes to mind.

I see the dollar continuing to make a significant recovery. Even if you think America is done, you have to recognize that there will be increased uncertainty in the coming weeks. In addition to QE2, we have had record low interest rates since December of 2008. This global economy’s is still in rehab. Uncertainty is almost a given, and should drive investors to flock for safety. And right now, safety is just another word for the US dollar.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.