Dollar Could Capitulate if Govt. Policies Fail

The U.S. dollar could go into freefall and capitulate if policies that the government has put in place start to failand if the deficit starts to grow, said Scott Redler, chief strategic officer at

Shorting the dollar and going long on equities is a great trade, but that relationship will change, he said.

"Right now the dollar has had a very orderly decline," said Redler on CNBC's Asia Squawk Box.

"Once you see it start to accelerate and once you see it start to get some fear and some disorder, that is probably when the Fed will come in and that's probably when the relationship will change," he said.

Redler added that as the dollar declines, oil and gold prices are going to move up.

"The Fed is really more worried about the unemployment picture, and future growth versus where the dollar is right now, unfortunately."