UniCredit Bank: The dollar is still expected to rise

The U.S. dollar edged back from its highs as traders took profits after the U.S. dollar index hit a two-month high on Thursday. However, the dollar is still expected to rise as markets now price in the possibility of a rate hike by the Federal Reserve at its June meeting.

A rate hike would “clearly lead to a stronger dollar across the board,” analysts at UniCredit Research said in a note. Additionally, the jump in the US dollar index above 103.50 is a clear sign of renewed dollar strength, as the index was trading around 101 earlier this month.