Stocks are being held hostage by the dollar and the S&P 500 is in a "struggling trend" that could push the index lower or lead to "horizontal" gains, Bill McLaren, independent trader, told CNBC.

U.S. pressure on China to raise the value of its currency amounts to Washington abdicating responsibility for ballooning deficits and would impede global economic recovery, an official Chinese newspaper said on Friday.

Oil fell nearly 1 percent on Friday as a stronger dollar weighed on prices and falling equities raised concern about the economy and the outlook for energy demand.

The dollar rose for a second straight session Friday as risk tolerance declined, with investors cutting exposure to assets and currencies perceived as higher risk ahead of a holiday-shortened week in the United States.

Expressing frustration over the Obama administration's light touch on China's yuan exchange rate, two U.S. senators asked the Commerce Department to investigate alleged Chinese currency "manipulation."

Risky assets have risen too much, too soon and too fast, but investors won't get an obvious sign that a correction is starting and will have to gauge fundamentals, Yogi Dewan, founder of Hassium Asset Management, said Thursday.

Global stocks were mostly lower Thursday as concerns about the pace of the recovery reared its head. Experts told CNBC they expect dollar weakness for some time to come and suggest staying out of cash.

There is no greater source of untapped internal demand than China, says Stephen Roach, Asia chairman at Morgan Stanley. But Roach cautioned that China would only be more attractive after a long overdue correction.

U.S. crude futures fell more than 2 percent Thursday as a stronger dollar weighed and weaker equities raised concern about the economy and a potential rebound in energy demand.

The dollar and yen rose Thursday as a pullback in risk appetite amid declines in equity and commodity markets revived safe-haven demand for the U.S. and Japanese currencies.

The sliding dollar has been a big reason why US stocks have rallied this year. But companies with strong foreign sales—which benefit most from the weak dollar—have had the biggest gains by far.

Global stocks and commodities rebounded on Wednesday, with gold rising to a fresh high near $1,150 an ounce. Experts told CNBC stocks are likely to rally through until the end of the year.

Chinese Premier Wen Jiabao told President Barack Obama his nation does not seek a trade surplus with the United States and wants to balance flows, striking a conciliatory note but avoiding public comment on currency rifts.

Oil prices rose on Wednesday as a drop in U.S. oil and fuel inventories outweighed wider economic concerns.

The dollar fell against most major currencies Wednesday as dealers took profits on the currency's biggest rise in three weeks, with fresh data doing little to alter the view that U.S. interest rates will remain at record lows well into 2010.