For investors who keep a close watch on the U.S. dollar, the last few weeks have probably made their eyes hurt. The value of the greenback has been bouncing like a ping-pong ball in a low-ceilinged basement under the influence of recent events, with conflicting implications for the economy. The greenback has felt the effects of a six-week stock rally of questionable sustainability; a flurry of government moves to revive the credit markets; mixed first-quarter earnings results for large U.S. banks; mounting speculation about bankruptcy for two of the big three U.S. auto makers; and policy pronouncements from international finance officials.

Overall the U.S. Dollar Index [USDX] is up nearly 17% since a year ago, as of Apr. 24, and has gained 7.4% since putting in its most recent low on Dec. 17, following a bout of late-year profit-taking. But make no mistake: The ebb and flow of sentiment about the dollar over the past five months defies simple description.

The net inflows and outflows for a handful of mutual and exchange-traded funds that bet on the strength or weakness in the dollar show a lack of conviction among currency investors. Take the Direxion Dollar Bull 2.5 X Fund (DXDBX), which seeks to earn 2.5 times the daily price performance of the U.S. Dollar Index through a long stance on the greenback, and the Dollar Bear 2.5 X Fund (DXDDX), whose strategy is the polar opposite. The Bull fund had a combined net outflow of $10.9 million for November and December, followed by an inflow of over $4.7 million in January as public optimism about the start of a new Administration in Washington took hold.

Dollar thrills for Bulls and Bears Similar patterns were seen at other dollar-oriented long and short funds.

The Bear fund, in contrast, attracted a net amount of $3.8 million for the last two months of 2008, only to see a net outflow of $2.3 million in January. As the stock market worsened in February, the Bear fund saw an inflow of $2.4 million, while the Bull fund had an outflow of $207,000.

The one-two punch of a rally in equities starting Mar. 9 and news on Mar. 18 that the Federal Reserve would begin buying billions of dollars in U.S. Treasuries resulted in an outflow of almost $4.4 million in March from the Bull fund, while the Bear fund attracted nearly $3.6 million.

Given the lack of clear direction, Robert Kowit, senior portfolio manager of the Global Fixed Income Group at Federated Investors (FII) in Pittsburgh, recommends that people stay away from all currencies for the time being, unless it's part of a broader asset allocation strategy to diversify their portfolios.