Well this is my personal theory. This is George Bush's way of correcting the trade imbalance. What has happened is the Euro has gone from trading about par (floor talk for 100) all of the way up to 127/128 in the last couple of days. The effect this had is anything that is an import from Europe now costs almost 30% more when translated to dollars. It also means any export to Eur now is 30% cheaper to buy there when translanted into Euro's. Simply put this should make it easier to sell our goods overseas, while making it much more difficult to sell their stuff here. It is like a tariffs that the WTO doesn't have any control over.
While that part looks good on the surface, the danger comes in foreign investment. If IIRC about 15% of the money in the US equities markets comes from outside of the US. (that is one in seven dollars) The effect this has is that yeah the dow was up 20% on the year, but if you were a European invester, you actually lost money in terms of real Euro's because those dollars are worth 30% less than they were when you bought the Dow. If this slide keeps up foreign money will take flight from the US, and most likely go to Europe or Japan where the currencies are strong, as well as the stock markets. If people start selling stocks, the markets will go right back into the toilet.
So in short to me, it will be interesting to see where the dollar settles into. It could be huge for the economic recovery.