“The GDP numbers are seriously misleading -- I think there’s much more underlying strength,” Alan Ruskin, the global head of Group of 10 foreign exchange at Deutsche Bank AG in New York, said in a phone interview on July 2. “If unemployment starts to fall below 6 percent, policy is going to look extraordinarily easy in the context of even inflation numbers at current levels.”

Employers added more workers than projected in June and the unemployment rate fell to an almost six-year low of 6.1 percent.

The addition of 288,000 jobs followed a 224,000 gain the prior month that was bigger than previously estimated, Labor Department figures showed today in Washington.

While strategists maintain their dollar optimism, hedge funds and leveraged investors have given up on the currency.

After reaching a bullish peak in January, net futures positions betting on gains in the greenback versus eight major currencies have been liquidated, reaching a net bearish position on April 8, according to CFTC data.

Net bearish dollar positions stood at 18,917 contracts as of June 24, compared with a 2014 peak net bullish wager of 241,987 contracts on Jan. 21.

 “Due to the disappointment in the growth outlook, and accompanying yield support, most investors were forced out of these trades or gave up on them,” said Saywell of BNP Paribas.

“Our survey now tells us the market is more or less flat dollars. So there is very little risk of position capitulation and there is significant potential to build dollar longs if an appreciation trend emerges, as we expect.”

Eoin Treacy's view

The Fed steadily handing over the mantle of the most activist central bank to the Bank of Japan and ECB. While the conditions might not yet be ripe for the Dollar to trend consistently higher this development certainly helps to support prices on pull backs.

While still with in a volatile multi-year range, the Dollar Index has found support in the region of 79 on a number of occasions since 2012. A sustained move below that level will be required to question potential for continued higher to lateral ranging.

This is particularly relevant to the outlook for Japanese equities with the Dollar finding support in the region of the 200-day MA.