However, currency forecasters say additional Fed stimulus will ultimately weaken the dollar.
“The Fed could start discussing the expansion of its balance sheet by the end of this year and begin with the asset purchases in early 2012,” John Normand, global head of foreign-exchange strategy at JP Morgan, told Bloomberg. “The bias will be for a modest retracement in the dollar from current levels. Investors are already extraordinarily long of dollars.”
PowerShares DB US Dollar Index Bullish
Full disclosure: John Spence owns UUP.