By Yasin Ebrahim

Investing.com – The dollar has ripped and roared its way to highest level since the pandemic began on a diet of Federal Reserve hawkishness, but the world’s reserve currency could soon run of steam as much of the rate hikes have been priced in.

The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.65% to 102.99, to its highest level since March of 2020. 

“The strong dollar cycle is looking long in the tooth,” ANZ said in a note, according to Forexlive, as a lot of rate hikes “have already been priced in.”

Last week, Fed Chairman Jerome Powell confirmed that Fed would hike rates 50 basis points per month in an additional boost to bettors who were betting on an aggressive Fed path.

Powell stated last week that 50 basis points would be available for May’s meeting.

As the Fed attempts to curb inflation, which is well over its target of 2.2%, traders are pricing the Fed’s decision to increase rates by 50 basis point at the three next meetings.

After Powell’s hawkish comments, speculation has erupted about whether Powell or other Fed members will mention that an additional 75 basis points will be taken into consideration.

“The post-meeting statement and Chair Powell’s press conference remarks will likely keep the door open to 75bp hikes, but we believe it is too early for an explicit endorsement,” Nomura said in a note ahead of the Fed’s meeting next week.

Others believe, however, that the majority of Fed hawkishness has been priced in and the dollar is vulnerable to the uncertain future.

“We may not have reached peak Fed hawkishness, but we must be getting close,” ANZ added. “[T]According to our fair value estimation, the DXY ($dollar index) has been overvalued,” ANZ says.