US dollar hits 16-month low—how much lower can it go?

As the U.S. dollar fell to its lowest since January 2015, currency experts told CNBC the currency's decline had further to run.

The greenback has fallen since the start of last week and traded at 92.26 against a basket of major currencies on Tuesday. This was the dollar index's lowest level since the start of last year.

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Currencies against which the dollar has posted notable declines include the Japanese yen. The dollar fell below 106 yen on Tuesday after the Bank of Japan surprised some currency traders by introducing no further stimulus measures at its meeting last week.

Analysts at Societe Generale and BBH told CNBC via email the dollar rout had further to run.

Marc Chandler, head of currency strategy at BBH, forecast the dollar would bottom in the coming weeks, reaching roughly $1.18 against the euro and 103 yen.

Kit Juckes, a top strategist at Societe Generale, said the dollar might approach 100 yen, but would need to do so in the next few weeks. He said euro-dollar could near or just fall through $1.20.

"Japan and the euro area don't have strong enough economies to get really strong currencies and both now have significant capital outflows that don't justify strength beyond the short-covering which started this move," Juckes told CNBC on Tuesday.

Craig Erlam, senior market strategist at OANDA, said the euro might reach $1.19-1.20 as soon as the end of May.

"Of course, this is dependent on the market continuing to price out a (U.S. Federal Reserve) rate hike until the back end of the year," he told CNBC via email.

UBS neutralized its underweight position on the yen following the Bank of Japan meeting last week, at which the central bank held its deposit rate at -0.1 percent and its base money target at 80 trillion yen ($0.8 trillion).

"The latest Bank of Japan meeting suggests that the central bank is in a wait-and-see mode, in spite of weakening economic data," Mark Haefele, chief investment officer at UBS Wealth Management, said in a report circulated on Friday.

"The recent strength in the yen means that Japanese investors in foreign assets, including the government's pension fund, are now considering whether to hedge their foreign exchange exposure. Such risk management measures could prevent the yen from weakening in the near future," he added.

UBS also introduced an underweight position on the Australian dollar versus the U.S. dollar.

The Aussie dollar declined on Tuesday after the Reserve Bank of Australia cut its cash rate to a record-low of 1.75 percent, surprising analysts.

"We believe that the recent recovery in the Australian economy is unsustainable, while U.S. growth is likely to rebound after a soft patch over the last two quarters," Haefele said.

Erlam said the dollar might test 100.50 yen in the next two to three weeks.

"Last week's appreciation in the yen does not paint a pretty picture for the Bank of Japan or Japanese exporters ... It's tough to know at which level the BoJ will say enough is enough but based on last week's announcement, we're not there yet," he told CNBC.

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