Winners and losers from the dollar’s rally

The U.S. dollar held on to its four-year high on Friday, thanks to Thursday's Wall Street selloff.

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The greenback traded at 85.27 against a basket of currencies early on Friday, near highs last reached in mid-2010. It was around a six-year high against the yen of 109.06 and a three-year peak of 0.78 euros. It also hit an all-time high against the Russia ruble on Friday, which fell to 38.97.

Analysts, meanwhile, have forecast the broad-based dollar rally will continue.

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"It is a structural move, so I think it can run further," Jens Nordvig, head of foreign exchange strategy at Nomura, told CNBC TV on Thursday.

Why the weaker euro is more of a dollar story
Why the weaker euro is more of a dollar story   

The dollar's strength has been felt around the world, particularly for the euro zone and emerging markets that are competing to keep their currencies comparatively low.

Here's a look at the possible winners and losers from the dollar rally.

Winner: ECB Chief Mario Draghi

The rise in the dollar has pressured the euro, which is down around 8.6 percent from a peak this May.

The decline in the euro should help boost inflation in the euro zone from record-low levels, as imports become more expensive and exports become cheaper.

Stronger price rises would take the pressure off the European Central Bank to instigate still more aggressive monetary stimulus measures. Currently, investors are touting the possibility of the central bank being forced to follow up its cheap loans to banks—known as TLTRO—and asset-backed securities and conduct Federal Reserve-style government bond purchases to boost inflation.

"If inflation expectations don't recover, TLTRO take-up does not improve and the ABS program does not get the support it needs from governments or regulators, then sovereign QE may come into play. There is an outside chance in December, but it is more likely next year," said Alberto Gallo, head of macro credit research at RBS, in a note on Thursday.

Currency wars are back: Pro
Currency wars are back: Pro   

On Friday, BNY Mellon's Simon Derrick told CNBC TV: "It suddenly starts to look like an awful like Mario Draghi is getting exactly what he wants with the euro."

Losers: Fed doves

A strengthening dollar is often seen as a sign of confidence in the U.S. economy—and potentially a bad omen for Federal Reserve members hoping for a later start to interest rate hikes.

This week, both New York Federal Reserve President William Dudley and Atlanta Fed's Dennis Lockhart expressed concern about the strength of the dollar.

Lockhart in particular played down the idea that dollar gains were a vote of confidence in the U.S. recovery, saying they could equally be a vote of low confidence about other countries. He stated in a speech in Jackson, Mississippi this Thursday that capital goods orders could get hit by the strength of the dollar, and exports generally would suffer.

He added that it would be better to raise rates too late, rather than too early and be forced to reverse course.

Winners: Central banks down under

The continuing strength pf the dollar will help central bankers outside the U.S. who are worried their own currencies are uncompetitively high. As the dollar appreciates, these currencies decline.

Both the Reserve Bank of Australia and the Reserve Bank of New Zealand have attempted to talk down their currencies in recent months. This Thursday, New Zealand Governor Graeme Wheeler repeated his warning that the kiwi exchange rate—which hit a three-year peak against the dollar in July—was unsustainable and unjustified.

"The bigger picture is still going to favor dollar gains against these currencies," Simon Smith, chief economist at FxPro, told CNBC on Friday.