Is the dollar rally over?

Though it has been on a historic winning streak, King Dollar has come dangerously close to running out of luck.

Oh sure, the U.S. dollar index has just completed a record eight consecutive monthly gains, the longest that has happened since it was created four decades ago. Since the start of July, the dollar index has gained 19.5 percent.

But in February, it was barely able to squeak out a win and was up just 0.5 percent on the month. That was the weakest gain out of the last eight.

However, not every trader is convinced the dollar’s time in the sun is done.

“I think this is actually a pause,” said Gina Sanchez, founder of Chantico Global. “The most important thing for the outlook on the dollar is going to be the expectation for future interest rates. And as long as those continue to remain hawkish – the belief that eventually we’re going to see an interest rate hike — then you’re going to continue to see strength in the dollar.”

Sanchez expects the Federal Reserve will hold off on a rate hike until September. In the meantime, the European Central Bank in the midst of quantitative easing, potentially weakening the euro versus the buck.

“We would have to see really, really bad numbers in the U.S. to avoid continued strengthening,” said Sanchez, a CNBC contributor. “The weakness of the rest of the world means the dollar continues to strengthen.”

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The technicals are also bullish, based on the chart work of Craig Johnson, senior technical research strategist at Piper Jaffray.

“The dollar will remain King Dollar and it will also retain its crown,” declared Johnson, who is also president of the Market Technicians Association.

He is particularly optimistic on the dollar index’s future because he sees it breaking out of a pennant formation that had been in place for over a month.

“The next move in the dollar – and it’s starting to happen today – is to the upside,” he said. “The next resistance comes into play at around 99 to 100. That’s where we think, in the short term, we can see the dollar further appreciate toward.”

Johnson sees the dollar as having bounced from a large bottom it made over the past five years.

“The dollar is still going to continue to strengthen,” he predicted. “It’s going to continue to pull in money from outside the U.S. and, ultimately, that means weakness for commodities, too. Bullish the dollar.”

Dollar Index

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