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."