The Russia-Ukraine war has exacerbated rising price pressures globally; with inflation data due for many countries this week, ING says, the currency markets' focus will be on the fast-responders.
"We will see March CPI (inflation) prints for quite a few economies this week -including the US. New cycle highs are anticipated. Expect these readings to favour the currencies backed by central banks ready to adjust rates fast, including the Federal Reserve," said Chris Turner, Global Head of Markets at ING.
"The dollar starts the week on its cyclical highs. The move remains very much driven by surging inflation and the fact that the Fed looks prepared to deal with it through 'expeditious' normalisation of monetary policy," he added.
Data released on Friday by the US Commodity Futures Trading Commission showed bets favouring the greenback fell in the latest week, partly reflecting investors' scepticism if the dollar's rise to near two-year highs last week already reflected the aggressive Fed tightening path.
The dollar index, which measures the greenback's strength against a basket of six major currencies, hit 99.823 on Thursday, the highest since late May 2020. It was last at 99.778.
"With much uncertainty in the global economy, we suspect investors will be happy to hold onto long dollar positions over the forthcoming Easter break, and we think DXY has a chance of securing a foothold over 100," said ING's Mr Turner.