NEW YORK (TheStreet) -- U.S. stocks endured a tough session on Tuesday, with the S&P 500 falling 1.7%. However, the U.S. dollar continues rising, climbing another 1%. The dollar index is now up 7% on the year. 

According to Raoul Pal, publisher of the Global Macro Investor, the dollar could have more that 25% upside from current levels. On CNBC's "Fast Money" TV show, he said a stronger dollar could put further pressure on oil prices, which could push the commodity into the $20s per barrel range. 

The drop in commodity prices will also pull down inflation and could even lead to a deflationary environment, Pal explained. In regards to oil prices specifically, the supply and demand situation isn't helping either. 

Demand in Europe has been weak due to the slow economic activity in the region, while China's economy has also shown weakness in recent quarters, which could hurt oil demand. Pal added that as the U.S. continues to produce oil, much of it is being bought for storage and sold at a later date. However, if the storage facilities run out of room, which is happening relatively quickly, the excess supply will be forced to be sold on the open market and production will need to be cut. All of this should continue to push oil prices lower. 

This is a "classic boom-bust cycle," he concluded. 

The strong dollar will weigh on earnings per share results from multi-national companies, according to Pete Najarian, co-founder of optionmonster.com and trademonster.com. Assuming the dollar does keep rising, it will likely keep short-term downward pressure on U.S. stocks, Najarian added. He also said volatility can continue to increase.

Karen Finerman, president of Metropolitan Capital Advisors, also believes volatility can continue to rise so she bought put options on the SPDR S&P 500 ETF (SPY) - Get Report to protect her portfolio from a market decline. She said if Europe's economy improves, perhaps the euro will stop declining so much, which may slow the rally of the dollar. 

Now that the Federal Reserve has stopped its quantitative easing programs and other central banks from around the world have recently started their versions, it's no surprise the U.S. dollar has been strong, said Dan Nathan, co-founder and editor of riskreversal.com. It could also start to hurt companies like Apple (AAPL) - Get Report, which are gaining more exposure to international markets, Nathan added. 

Apple hasn't traded very well, Najarian said. If the stock declines to the 50-day moving average at $118, it's a "monstrous" buy, he said.

If the dollar index breaks above 121, then it's going a lot higher, said Steve Grasso, director of institutional sales at Stuart Frankel. If that's the case, look for the rally to put pressure on energy stocks. However, a stronger dollar should be good for financial stocks, as will a rate hike. 

The Comprehensive Capital Analysis and Review results -- stress tests -- will be released Wednesday after the close There seems to be more downside risk than upside risk to the banks, as far as capital return expectations go, said Eric Wasserstrom, managing director at Guggenheim Securities. 

If history is any sign, there will likely be some banks that do not meet the requirements necessary to return capital to shareholders, he added. Bank of America (BAC) - Get Report has the most upside while Goldman Sachs (GS) - Get Report and American Express (AXP) - Get Report could disappoint. Citigroup (C) - Get Report will likely meet the Fed's requirements but may not return as much capital as investors want.

If the financials trade lower on the test results, investors should consider buying the sector on a pullback. The group will likely rally if the Fed hints at a possible rate hike at its next meeting.

For their final trades, Finerman is buying United Rentals (URI) - Get Report and Najarian is a buyer of Kraft Foods (KRFT) . Grasso said to buy E-Trade Financial (ETFC) - Get Report and Nathan is selling the SPDR Homebuilders ETF (XHB) - Get Report. 

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