Strategists say the beaten-up dollar could be in the process of making a turn higher, thanks to Federal Reserve policy.
The dollar index was up just slightly Monday at 95.05, but it is down about 6 percent for the year so far, after surging 7 percent in the fourth quarter on expectations that President Donald Trump's policies could boost the economy.
Analysts say the dollar is now looking elsewhere in Washington for support, and it should follow Treasury yields higher with Federal Reserve policies as a driver.
"I think we're in a turning pattern, and we went from excessively overweight dollar positions at the end of the year to probably underweight positions," said Robert Sinche, chief global strategist at Amherst Pierpoint.
Markets have been doubting the Fed would go through with a third rate hike this year, but Fed officials reinforced its forecast in recent comments and in the minutes of its last meeting, released last week. Fed Chair Janet Yellen testifies before Congress Wednesday and Thursday, and she is expected to deliver the same message.
Source: Bloomberg Pro Terminal
Junior Trader Stefan Panteleev
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