How to trade the US dollar in Q2

But for Steven Englander, global head of G-10 FX strategy at CitiFX, the economic data could well pose a problem for the dollar.

“I think that the dollar may struggle a bit at the beginning of the second quarter,” Englander said.

If Friday’s employment report is weak, “it could be enough to make investors concerned that the Q1 weakness is now showing up in employment. That could suggest that what we saw in Q1 is not an aberration, it’s potentially the beginning of a more extended slowdown—and that would be dollar-negative.”

Read MoreHow long before jobs number disappoints?

Additionally, Englander noted that “the market is very long dollars—still.”

For those reasons, the strategist predicted that “it goes up, but there is probably more upside risk in the second half of Q2 than right at the beginning. I don’t think the divergence trade is done, but it may be pausing for a bit.”

“It’s clearly a consensus trade. It’s what everyone is living off of right now,” agreed Stacey Gilbert, head of derivative strategy with Susquehanna.

Indeed, Gilbert noticed some interesting bearish trades on the PowerShares Bullish U.S. Dollar ETF (ticker symbol: UUP), perhaps as traders figure that “given it’s such a consensus trade … there may be a drop” between now and June.

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