New New York Fed President Bill Dudley says he believes the deleveraging process is far from complete and that the economy has considerable momentum to the downside. The Fed will do whatever it takes to keep markets working and credit available.

If deleveraging continues than the dollar strengthens. Full stop. Much of the world’s debt was dollar denominated (which is why the Fed has had to extend swap lines to all the global central banks; their domestic banks need Dollar funding.) If the market continues to deleverage, USD dips will be shallow.