Siegel: U.S. dollar makes for bumpy ride to Dow 20,000

Despite the volatile start to the year, uber-bull Jeremy Siegel still thinks the Dow Jones industrial average could hit 20,000 this year. However, he told CNBC, it may be a bumpy ride.

That's because while the favorable market trends are in place, the strong U.S. dollar is a headwind for both the U.S. economy and the stock market.

"Almost 40 percent of revenues of S&P companies come from abroad. Those revenues are going to translate into less dollars," the Wharton School finance professor said in an interview with "Closing Bell."

"We're going to get cheaper imported goods, which is ultimately good for the consumer, but there are going to be headwinds in terms of selling abroad, in terms of translating."

Jeremy Siegel
Scott Mlyn | CNBC
Jeremy Siegel

However, he thinks the Federal Reserve may hold off on hiking interest rates for much longer than expected as a result of disinflation and low inflation.

When Siegel first suggested Dow 20,000 for 2015, he cited several factors that could power stocks higher, including economic growth of 3 to 4 percent, low inflation, cheap gas prices and an improving job market.

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Last year, he correctly predicted the Dow would surpass 18,000 by the end of the year.

Siegel pointed out that last January was also a bad start to the year, but stocks ultimately ended higher. The Dow ended the year up more than 7 percent, the Nasdaq rose 13 percent and the S&P 500 ended up more than 11 percent.

In fact, while plummeting oil prices sent the stocks lower Monday, Siegel pointed out that in the long run, low oil is good for the economy.

"As an economy, we know we are a net importer so we know we gain as an entire economy when oil prices go do. It's just that those effects are longer to show up than the negative effects on the earnings of the energy sector," he said.

Stock trades fee 'terrible idea'

Siegel also called a proposed fee on stock trades a "terrible idea."

The fee is part of a plan by Rep. Chris Van Hollen, D-Maryland, to give a "paycheck bonus tax credit" to the middle class. To finance the benefits, he proposes tax benefit reductions for the top 1 percent of earners and a 0.1 percent fee on stock trades.

Read MoreStagnant middle class incomes: The political fallout

"Liquidity is one of the greatest features of markets, and if you're going to tax transactions, you are going to lower liquidity and every model I know, lower liquidity means lower prices, more costly capital raising," Siegel said.

—CNBC's Matt Belvedere contributed to this report.