For most market observers, all eyes and ears will be on Federal Reserve Chairman, Ben Bernanke, as he delivers a speech in Jackson Hole this Friday. We already know the Fed's intention to maintain a zero interest rate policy until 2013. The Fed's action is unprecedented and probably underscores the fact that they have little ammunition left in their arsenal beyond jawboning to stimulate the economy. At best, it is a symbolic gesture and one that tells me just how weak the economy is. Nonetheless, investors are searching for clues, and wondering what sort of magic Bernanke can pull out of his hat that would soothe the markets.

One place to search for clues as to the future of monetary policy is the Dollar Index. I have maintained that the Dollar is in a downtrend. (See article: "And the Answer Is...'). This isn't news but a fact. But as long as the down trend is manageable (i.e., isn't accelerating) the markets seem to be ok with this. But that could change and the Dollar could unravel if Bernanke pulls that rabbit out of his hat.

Figure 1 is a daily chart of the PowerShares DB US Dollar Bull (symbol: UUP). This is an ETF correlated to the movements in the Dollar Index. The red and black dots on the chart are key pivot points, which are the best areas of buying (support) and selling (resistance). So this is what I am watching. If the UUP closes below the key pivot at 20.92, then the Dollar is going lower, which means Bernanke, in all likelihood, has taken an extraordinary measure to soothe the markets and boost asset prices.

Figure 1. UUP/ daily