By Yasin Ebrahim 

Investing.com — Recent meltdown in the dollar is over as prospects for the Federal Reserve to halt its rate-hike mission later this year increase.

The, which is used to measure the greenback in relation to a basket of six major currencies that has been trade-weighted, dropped 0.30% from 101.79

“When it comes to the US, the idea of a Fed pause in the summer is gaining a little traction,” ING said in a note.

Fed chairman Jerome Powell, along with other Fed members, laid the foundation for two 50-basis point rate hikes during the two next meetings. These would allow the central bank to breathe and reassess its threat of inflation becoming entrenched.

Atlanta Fed President Raphael Bostic was the latest Fed member to back the idea of a Fed ‘pause’ later this year. 

“I have got a baseline view where for me I think a pause in September might make sense,” Bostic told reporters Monday following a speech to the Rotary Club of Atlanta.

The remarks arrived on the heels of the Kansas Fed President Esther George, a former arch-hawk, who on Monday “seemed to support the view that the Fed should re-assess the situation after 50bp hikes in both June and July,” ING said in its note.

Two-year Treasury yields have been affected by the cooling of Fed rates hike expectations. They are very sensitive to Fed rate hikes and the dollar has been forced to slow its growth.

While stability in the US rates markets “could start to see volatility levels temporarily edge a little lower,” ING was quick to warn that a  prolonged u-turn, or correction, in the greenback was unlikely.

“We favour stability over a sharp correction lower for the broad dollar trend – largely since the Fed has the largest cause of any to be tightening rates sharply,” ING said, noting that the Fed could change following the central bank’s June meeting.

“This could all change at the next FOMC meeting on 15 June if the Dot Plots were to show 3%+ rates for end-23. But that FOMC meeting is three weeks away.”