"Long-term, the secular fundamental case for commodities is there. Short-term, the dollar rallying makes you want to step back a little bit from commodities," Reilly says. "The tricky part about it is it's almost impossible to say what is the fair market value for a barrel of oil like you can for a stock or a bond."
The dollar waffled Monday, posting early gains against the euro that it eventually surrendered while holding higher against the yen. Oil prices fell sharply earlier in the day, recovered somewhat then dipped again as the dollar moved higher against the yen and the stock market shot up.
Analysts are closely watching the banking situation in Europe. As the Fed has cut interest rates and weakened the US currency, the euro has overpowered the dollar because the European Central Bank and the Bank of England held rates level and supported their currency.
But that trend has shown signs of breaking as Europe begins to confront its own subprime mortgage problems and an ensuing credit crisis.
"The psychology around the dollar is shifting a little bit in the sense that in Europe we're starting to see some of the same real estate and mortgage problems that the US has been suffering from," says Larry Edelson, an analyst with Weiss Research's Money & Markets online newsletter. "There's a perception in the marketplace that the US is past its peak regarding the subprime crisis whereas Europe might not be."
But a soft US economy could continue to present problems for the dollar.
"It had really been beaten up so badly that it's not a big surprise that there was at the very least a short-term strengthening of the dollar," says Bruce Fenton, president of Atlantic Financial. "Longer-term I'm still not optimistic about the US economy and the dollar included."
"I think most of the world's savvy investors realize the dollar is likely to fall a lot more over the long term," Edelson adds. Creating inflation and drives up the value of assets against the debt used to pay for them is "how you ease the burden of massive debts that we have in this country."
But Brian Gendreau, investment strategist at ING Investment Management in New York, says one of the very reasons the dollar has rallied is that things aren't as bad as many thought.
"I think the market participants are smelling a rotation. If you look at what was causing the dollar to go down for a long time, it was the US economy was weakening when growth was holding up fairly well abroad," Gendreau says. "A lot of the news now is that the US economy is stronger than expected.