The Fed's current policy stance is why the dollar is not likely to rebound any time soon, says Adam Boyton, Deutsche Bank currency strategist. "It's loose policy on both the fiscal and monetary sense, and no sign really that the Fed  is contemplating taking any of that monetary stimulus back any time soon," said Boyton.

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The dollar index hit a low in March, 2008 of  70.70. Its low Monday was 76.02, but it had hit a year high of 89.62 as it benefited from a flight to quality play in the fourth quarter and first quarter of this year. "I think now we're coming back to the fundamentals we used to look at, which are relative interest rate differentials, and the new one is relative fiscal policy," he said.

Boyton said based on Deutsche Bank forecasts, the European Central bank should begin tightening in the third quarter of 2010, but the Fed is not expected to tighten until 2011, a scenario that would keep the dollar under pressure. Boyton said the dollar is also impacted by the move of central banks to build euro reserves, and also by the talk challenging the dollar's status as reserve currency.

He said he thinks the latter discussion is not likely to end up in any change for the dollar. "There isn't' really an alternative to the dollar. These shifts take a lot of time, and they need a clear alternative," he said, adding he sees no alternative. "The other thing about a reserve currency is they need a strong sovereign behind it."

What Else to Watch

The NFIB small business survey for September is released at 7:30 a.m. Tuesday, and the federal budget release is at 2 p.m. At 1:45 p.m., Fed Vice Chairman Donald Kohn speaks at the National Association of Business Economists meeting in St. Louis, Mo. New York Fed President William Dudley speaks at 1:15 p.m. at the Institute of International Bankers.

Other companies reporting earnings include CSX and Altera, after the closing bell.

The Senate Finance Committee is expected to vote on its health care bill Tuesday.

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