“Our expectation is for modest further upside to the US dollar in early 2016 as the start of the cycle creates a new high-water mark in global policy divergence,” Bilton said.

Meanwhile, as the U.S. dollar losses steam, investors may turn to overseas economies, notably the undervalued emerging markets.

“As the upside risks to the dollar subside through the year, the outlook for emerging market assets has scope to brighten,” Bilton added. “Simply put — the longer dollar strength persists, the more 2016 will look like 2015, but the sooner the dollar stabilizes, the quicker we will see sentiment recover and emerging economies repair.”

Consequently, some of the most unloved ETFs of 2015 like the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and iShares MSCI Emerging Markets ETF (NYSEArca: EEM) may begin to turn around. Additionally, ETF investors can also take a look at the relatively new JPMorgan Diversified Return Emerging Markets Equity ETF (NYSEArca: JPEM), a smart-beta emerging market ETF incorporates a multi-factor screening process that combines value, momentum and quality factors.

Max Chen contributed to this article.