The dollar has soared to multi-year highs against a range of currencies in recent weeks, touching a 12-year peak against the euro and a seven-year zenith versus the yen this week.
And many experts say the party isn't close to an end. That's because economies and monetary policy are heading in different directions in the United States and overseas.
"On the euro side of things, we knew that QE [quantitative easing] was going to happen, so the euro move is starting to be baked in," Christophe Caspar, chief investment officer of multi-asset solutions at Russell Investments, told The Wall Street Journal
"On the dollar side, however, there are still a lot of unanswered questions around the likely timing of a rate hike, meaning that there is still plenty of potential for the buck to rise."
The eurozone economy grew only 0.9 percent last year, and Japanese GDP fell in two quarters last year, while U.S. growth totaled 2.4 percent.
So it's no wonder that both the Bank of Japan and European Central Bank are easing aggressively while the Fed considers when to raise interest rates.
Many experts predict the dollar will soon reach parity with the euro, which traded at $1.0626 Thursday morning.
Jeffrey Gundlach, CEO of DoubleLine, thinks the move will last for a while too. "Everybody's bullish on the dollar now," he said in a webcast obtained by CNBC
. "Currency trends go on for a very long time."
While many experts are worried about the deflationary effects of a stronger dollar and its depressing effect on U.S. corporate earnings, former Federal Reserve economist John Mason says the dollar's ascent is a good thing.
"Fed Chair Janet Yellen should support a higher value for the dollar because, contrary to popular belief, it's in the best interest of the United States to have a stronger currency," he wrote in an article for TheStreet.com
"Policies that weaken the dollar, like those the United States has followed since the early 1960s, may help the economy, and the labor markets in the short-run," Mason explained.
"But over the longer-run, more research is indicating that these policies can be harmful to economic productivity and consequently economic growth, because the economy becomes less competitive."
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