Different Expectations with U.S. Dollar

The U.S. dollar index, which tracks the greenback’s moves against a basket of six other currencies but is heavily weighted toward the euro/dollar rose nearly 9 percent in the the first three months of the year, for the best quarter since Q3 of 2008.

And some traders think the real dollar rally could just be getting started. “Clearly, the dollar strength has been the key driver across asset classes in the first quarter,” said Rich Ross, technical analyst with Evercore ISI. “And when you look at that short-term chart, there’s very little to suggest that the trend of dollar strength is ending.”

Ross said the chart has formed a “nice base of support,” which should set up the index for a retest of the 100 level. And though he doesn’t find the long-term picture to be quite as bullish, Ross said that given how bad the chart of the euro/dollar currency pair looks, “you want to continue to buy the dollar, and I think we’re going to see the strength continue into the second quarter.”