How Smart is it to be Bearish Given the State of the US Dollar?

The more I research the state of the U.S. Dollar, the more I realize that although market fundamentals do not support the price levels we are currently seeing, as a bear, we must exude caution while waiting for the market to move back down (if you are not aware the markets are moving in an inverse relationship to the dollar, you should be). That doesn't mean I will cover my short position just yet. We could still see a brief spike in the dollar to help fuel a small dip in the market. It is not unrealistic to see the SPY retrace back to the $106 price area, and possibly even $104. But overall, looking forward, the dollar will likely decline further. It is still relatively strong, well above the lows we saw in March of 2008 and that is striking because the state of the economy is not good. Unemployment is over 10% for the first time since 1983, the Fed is printing money at will, US debt is increasing, the banking sector is in shambles, housing starts are down big, real estate is by no means recovering, mortgage foreclosures and delinquencies are at record levels, the Fed has declared it will keep interest rates at the lowest levels possible well into the foreseeable future and US dollar carry trade is blossoming. If you don't know what carry trade is, it is when people (or institutions) from all over the world borrow one currency (US dollars) because it is cheap and reinvest it in higher yielding entities, for example in foreign bonds with a higher interest yield. In this case, the dollar is borrowed and then sold therefore bringing down its value. This will continue and fuel the dollar's decline further. All this spells great trouble ahead.