These stocks are poised to rally on a weaker dollar

Caterpillar Inc. excavators are displayed for sale at the Whayne Supply Co. dealership in Louisville, Kentucky, U.S., on Monday, Jan. 27, 2020.
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The dollar just had its worst month in a decade in July and the reserve currency is expected to weaken further as the world grapples with the coronavirus pandemic. 

The dollar index, which measures the U.S. dollar against six major global currencies, has dropped nearly 7% since May and lost about 4% in July, its biggest monthly drop since September 2010. The dollar was strengthening on Monday, but as the Federal Reserve continues its unprecedented monetary policy lending measures, the dollar could drop as much as 15%, according to Jefferies. 

As financial markets recover from the coronavirus recession, safe-haven appeal has been waning, pushing down the dollar index. Plus, market expectations for further easing of U.S. monetary policy, and a lack of agreement among U.S. lawmakers on further fiscal stimulus are also pressuring the dollar. 

"With the Fed now restarting a new round of QE, we think there is a case for a decline back to the previous QE era, especially if other central banks do not similarly expand their QE programs," Global Head of Microstrategy at Jefferies Desh Peramunetilleke told clients.