Dollar bulls are using it as an insurance policy against the coronavirus impact

A hand holds a series of fanned out U.S. dollar notes.
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Despite a bumpy ride for the dollar over the last few days, one strategist told CNBC that it's one of the best places to park your money during the current market turmoil.

On Friday morning, the dollar index, which measures the greenback versus a basket of major currencies, was trading around 0.25% lower at 96.574. It comes after a month which saw the index gain around 2%, before falling back over 3% from its February high.

David Bloom, global head of FX strategy at HSBC, said currency traders should consider what the U.S. is "throwing" at the coronavirus outbreak.

The U.S. Federal Reserve cut its benchmark interest rate by 50 basis points on Tuesday in an attempt to mitigate some of the economic impact of the coronavirus crisis, and The House of Representatives passed a sweeping bill Wednesday allocating more than $8 billion in funds.

"You've got the best starting point, you've thrown 50 basis points at it, you're throwing billions at it, and everyone says, 'I'm bearish,'" Bloom told CNBC's "Squawk Box Europe" on Thursday. 

According to Bloom, the Fed's surprise move actually made the dollar more appealing than other G-7 currencies like the euro. Usually, when a central bank cuts rates its currency falls; after the Fed's emergency rate cut Tuesday, the dollar index fell sharply.  

Dollar comes with a 'free insurance policy against all bad things', strategist says
Dollar comes with a free insurance policy, strategist says

Despite this, Bloom emphasized its risk-off properties.

"One thing about the dollar is when you buy it, you get a free insurance policy against all bad things," he said. "That's why the dollar performs well and I think it'll continue."

"The U.S. is in the best place to start off with; we saw from the numbers yesterday it's the strongest economy, and they've got policy action they're putting in. Wouldn't you prefer that to someone who sits back and does nothing?"

He said the European Central Bank "can't" cut interest rates because they're already so low. The ECB's main deposit rate currently sits at -0.5%.

US recession?

Jane Foley, senior FX strategist at Rabobank, also suggested the dollar would remain strong as coronavirus fears continued to weigh on sentiment.

"Irrespective of Fed rate cuts, in our view demand for the USD is likely to be firm as long as the coronavirus crisis continues and fears of recession build in various parts of the global economy," she said in a note on Wednesday.

Foley noted that Rabobank had already forecast a mild recession in the U.S. this year, irrespective of the outbreak, but said the "closed nature" of the American economy meant the fallout was likely to be "far greater elsewhere."

"Given the importance of the USD as a transactional currency and a store of value, this is not an environment that is likely to encourage a steady flow out of the greenback," she added. "By contrast, fears of a liquidity crunch are likely to bolster USD demand."

However, other analysts are less bullish in their outlook for the dollar.

In a note on Wednesday, Kit Juckes, macro strategist at Societe Generale, speculated that the Fed was "not done cutting quite yet" — and other economic factors would pull the dollar downward.

"What will drag the dollar durably lower won't be Fed easing as much as slower growth. That's coming," he said.