The dollar is likely to rise a bit further, but a tame U.S. rate hike outlook at a time of waning firepower from those global central banks still easing policy will limit its gains, according to a Reuters poll of foreign exchange strategists.
The Fed is still poised to pull the trigger in December, but its lingering hesitation in delivering even one rate hike this year after suggesting initially that four were in the pipeline has pushed the dollar down over 2 percent so far in 2016.
"Even though the Fed is likely to normalise rates further by hiking in December...markets should remain skeptical about the speed and the aggressiveness of its tightening cycle over the longer-term," said David Forrester, FX strategist at CA-CIB.
"In addition, the ECB and the BoJ are running out of options to ease aggressively further. Taken as a whole, the G10 central bank backdrop could reduce the positive impact on U.S. dollar from any future Fed tightening."
Forecasts for the dollar to rise further against major currencies have been whittled away in the run-up to the U.S. presidential elections next month, but a majority of analysts still expect it to edge higher.
The latest positioning data from the U.S. Commodity Futures Trading Commission showed currency speculators have increased outright bullish bets for the U.S. dollar to the highest in six weeks at the expense of the euro.
But the latest Reuters poll of 65 currency strategists is the third consecutive survey that forecasters have bumped up their euro calls slightly.
The consensus is for the single currency, which is up around 3 percent this year, to weaken against the dollar to $1.09 over the coming 12 months from $1.12 on Thursday.
By the end 2016, the euro is also expected to be higher than where it started the year, marking the first calendar year of gains for the currency since 2013. That comes despite the European Central Bank's extraordinary stimulus measures.
There is a clear sense now among analysts, traders and investors that the potency of further monetary easing from major central banks is on the wane.
Indeed, while the Bank of Japan rebooted its policy framework last month by introducing a target for 10-year JGB yields of around zero percent, forecasts in the latest poll are for a stronger yen than predicted in January.
Then, analysts were calling for the yen to fall against the dollar to 125 in 12 months. Now they are expecting it to weaken to 105.0 from 103.6 on Thursday. The yen is up almost 14 percent this year.
Meanwhile, the battered pound is expected to tumble to new multi-decade lows in the coming months on concerns that Britain's exit from the European Union could get messy. [GBP/POLL]
Prime Minister Theresa May said on Sunday Article 50 of the Lisbon Treaty - which would formally begin the two-year countdown to Brexit - would be triggered by the end of March, pushing the British pound to below $1.27 on Wednesday for the first time in over three decades.
The latest poll showed sterling would fall as low as $1.24 in the run-up to that.
"I'm slightly surprised the pound hasn't bounced from its fall ... but not surprised enough to prevent me being bearish long-term. To be fair, absolutely no-one is going to change their view of the UK economy, sterling or the wider implications of 'Brexit' until there are mountains of evidence about the economic impact," wrote Kit Juckes, global head of FX strategy at Societe Generale.
(Additional reporting by Sumanta Dey and Hari Kishan; Polling by Krishna Eluri and Anu Bararia; Editing by Ross Finley and John Stonestreet)