USD should rally through at least the first few Fed hikes

The USD Index has been moving sideways, as German rates are leading the global bond market sell-off. However, with Treasuries expected to start driving global rate moves sometime this summer, the dollar should resume its uptrend. 

Even though this Fed hiking cycle will be the most anticipated in at least three decades, it's hard to see the dollar failing to rally as we approach Fed lift-off, when market liquidity will be tested properly. 

"We see DXY up 6% by 1Q16 and JPMQUSD up 3%. However, after the first 50bp to 100bp of hikes, we are not so confident that the dollar uptrend will persist, simply because it is unclear how much tightening a somewhat fragile US economy can absorb." says JP Morgan