FXStreet reports that according to Jane Foley Senior FX Strategist, Head of FX Strategy at Rabobank, the re-inflation/inflation debate is unlikely to fade meaning that pockets of USD strength are likely in the coming months.

“Almost irrespective of whether or not the Fed is correct in its assessment that this year’s inevitable spikes in inflation will pass, there are sufficient doubts over whether all price pressures will be fleeting to keep the market anxious. This suggests scope for choppy trading which implies that there are likely to be pockets of support for the USD in the coming months”  

“In the bond market, a moderate move higher in real yields would generally be taken as a signal that the market is expecting a decent economic recovery, meaning that expectations about an increase demand will be outstripping those related to higher inflation. This scenario should therefore be broadly welcomed.”