Big Media has been busy cheerleading the dollar since it regained strength last week. But don’t expect it to keep on rising, says Andrew Gordon. News on inflation, housing and retail sales is all bad. Financials are still struggling. And the Fed is all hot air on an interest rate rise.

The US Dollar Index was up 0.38 percent last week. Its strength helped bring the price of crude oil down. The dollar still matters enormously. But, as you can see from the chart, it didn’t break any important resistance. It didn’t break its 20-week (the red line) resistance. Even when it did – at the beginning of June – it didn’t hold. And it’s not even near the upper rail of its channel.

It’s very hard to see the dollar making a sustained upward move. But did you notice how weird last week was? News came out on inflation, housing, and retail sales. And it was all bad.

Freddie’s (FRE) and Fannie’s (FNM) precarious situation dominated the financial news, as well. It reminded everybody of the dire straits the banking sector is still in. And the quarterly reports by Merrill reinforced the message.

All it took was Citigroup (C), JP Morgan (JPM) and Wells Fargo (WFC) jumping over a very low bar to cheer up the market and give the dollar a boost. And the government’s pledge not to let Freddie and Fannie fail turned a negative story into something (sort of) positive – but not for American taxpayers who will have to pay the gigantic bill.

The Fed is trying to talk up the dollar, but the odds now suggest that it won’t raise rates until the end of the year at the earliest.

All in all, its’ not a particularly strong foundation for a dollar rise, is it? Look for it to fall some more.