Will U.S. be able to support strong USD?

US net trade has been dragging the country's growth in recent quarters as pointed by Federal Reserve. It is unlikely that this is caused due to the dollar, the global demand can be blamed for this. However even if the greenback appreciates, US is well placed that it can bear its currency appreciation.

If the domestic demand in other parts of the world like Europe, China and Japan can be successfully boosted by monetary easing, then it will benefit US also, irrespective of the appreciation of USD.

Most of the global trade is denominated in US dollar, there might be lesser exchange rate pass through compared to other countries. For instance, 93% of US imports are denominated in USD.

"Both on the growth and the inflation front, USD has room to rise. 2016 is also election year. With many US companies parking earnings abroad to avoid taxation on repatriation, a significant tax reform also has the potential to be USD positive", says RBC Capital Markets in a research note.