The dollar's momentum against the Japanese yen is the key to the dollar rally.
The dollar index has been on the move since Friday, but the greenback has been rising against the since Thursday, and its ability to keep that rally going will be the test. Dollar/yen was at 123.85 midday Wednesday and temporarily broke through 124, a key psychological level not seen since June 2007.
If the market can hold above 124, it would be an important statement. "That will really influence currencies. Yields have moved ahead of it and stabilized, and dollar/yen is going to be the one that will really move. This would basically be the market becoming convinced the dollar rally is unstoppable," said Boris Schlossberg, managing director, foreign exchange strategy at BK Asset Management.