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Traders call for the dollar to get even stronger

The U.S. dollar strengthened on Monday, as the greenback neared the highest levels since April in relation to the basket of major currencies contained in the popular dollar index. And some strategists and technical analysts say the greenback is only set to get stronger.

For Marc Chandler, global head of currency strategy at Brown Brothers Harriman, the key to the dollar's rally will be the difference between what the Federal Reserve and the European Central Bank do.

Chandler, like most market participants, believes the Fed will be in tightening mode over the next year, raising short-term interest rates after years of keeping them at ultralow levels. Meanwhile, he sees the ECB doubling down on its bond-buying program.

"We're not at the peak, yet, of the monetary divergence," Chandler said in a Monday "Power Lunch" interview. "And this divergence is the key driver of the capital markets."

Should U.S. interest rates indeed rise, it will become more attractive for investors to hold dollars, which will add to the greenback rally. Meanwhile, further quantitative easing in Europe would have the opposite effect, likely increasing inflation pressures and pushing the euro lower. Both of these moves, then, should lead to a stronger dollar and weaker euro.

The technicals tell a similar story to the fundamental call, according to Oppenheimer technical analyst Ari Wald.

The chart "does support further dollar appreciation over the coming years," he said Monday on "Power Lunch." "The more recent strength is marking the continuation of the upward move we've seen."

Wald sees the index rising to 107, which is 8 percent above current levels.

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Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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