The current weakness in the U.S. dollar may be short lived, as a pick-up in inflation and expected rate hikes by the Federal Reserve will support the greenback in the coming months, JPMorgan Asset Management said Wednesday.
"We're thinking that the dollar will actually rebound in the second half, and this is mainly as the markets re-price in interest rates hike. We're of the view that inflation will actually be picking up in the U.S. and currently, markets have only priced in one rate hike now till end-2018," Jasslyn Yeo, global market strategist at JPMorgan Asset Management, told CNBC's "Street Signs."
"So, we think (markets) are going to do a bit of re-pricing and that will support a bit of a rebound in the dollar," she added.
Some market observers have said that a weaker dollar can help to boost earnings of S&P 500 companies and eventually justify their high valuations. But Yeo said equity markets outside the U.S., such as Europe and Japan, have more upside potential.