The foreign exchange market, one of the most volatile and unpredictable areas of speculation, continues to drive the fortunes of stocks, commodities and pretty much everything else. With the dollar dropping hard and the euro rising Wednesday on reports that Europe is prepping a way to push capital into Spain's beleaguered banks, risky assets, especially dollar-sensitive precious metals, are blasting higher.

Such are the consequences of a pullback by retail investors and a rising domination of hedge fund types and high-frequency computer trading algorithms. No matter -- we can use it to our advantage.

First, the details. This morning's policy announcement from the European Central Bank was a dud, with no new actions hinted as the institution remains worried about lingering inflationary pressures.  But this was eclipsed by multiple reports that Europe is frantically cobbling together a possible solution to the Spanish banking problem. According to RBS estimates, with borrowing costs rising fast, Spain needs nearly $600 billion in assistance just to get it through 2014 as it battles with the legacy of an epic housing bust and bad mortgages.

But Spanish leaders, mindful of their too-big-to-fail status within the eurozone, are pushing back against Germany's insistence that they follow Portugal, Ireland and Spain into the arms of an international bailout administered by the International Monetary Fund, the ECB and the European Union. Instead, Spain wants the E.U. bailout funds to bolster its banks without requesting a formal bailout.

The stalemate seems to be breaking in Madrid's favor.

According to reports, German official believe the bailout funds would be used for direct bank assistance in exchange for a say on executive strategy and management. The kicker is that if it all goes sideways, the home state would be on the hook for any losses. The good news is the assistance would not be added to Spain's sovereign debt levels and could help break the cycle of weak banks, higher government debt, higher sovereign borrowing costs, and even worse banks as their government bonds lose value.

With Europe finally taking constructive steps after a lot of foot dragging, traders are rushing to close extended short-euro/long-doll​ar trades. And that's benefiting a whole range of assets with gold, silver and the related mining stocks leading the way, as I've been expecting since I warned about the dollar last week. The Edge Letter Sample Portfolio was well positioned for this, with Great Basin Gold (GBG) up more than 21% and the Velocity Shares 3x Silver ETF (USLV) up more than 15%.

New areas of strength include emerging-market stocks and semiconductors. I'm adding new positions in these areas to the portfolio.

The short-euro/long-doll​ar trade got very extended, so look for this dynamic to continue for at least the next week and a half heading into the next round of Greek elections on June 17. Then we have a G-20 meeting in Mexico on June 18-19. And, finally, a big eurozone summit on June 28-29.

I plan on booking profits and moving largely to cash ahead of those events.

Technically, the S&P 500 has popped back over its 200-day moving average. Normally, a retaking of this oft-cited line of demarcation between bull and bear phases would be considered a sign of strength. But history suggests otherwise.

According to the folks at Sundial Capital Research, since 1928 there have been 19 times when the S&P 500 was above its 200-day for several months, dropped below, then popped up again. Only four of those events went longer than a month before shares dropped back below the 200-day.

On average, it took the index only five days and an additional 0.7% rally before it gave it up and fell away again.

Trading update

Two new, leveraged ETF positions are being added to the Edge Letter Sample Portfolio: The Direxion 3x Emerging Market Bull (EDC) and the Direxion 3x Semiconductor Bull (SOXL). Less aggressive options include the unleveraged iShares Emerging Markets (EEM) and the Market Vectors Semiconductors (SMH).

I am also covering my two regional bank shorts.

Check out Anthony's investment advisory service The Edge. A two-week free trial has been extended to MSN Money readers. Click here to sign up. Contact Anthony at anthony@edgeletter.c​​om and follow him on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.