According to CNBC, currency strategists said growing fiscal risks, softer U.S. economic data and uncertainty over Federal Reserve policy could intensify pressure on the U.S. dollar despite its recent strength. The U.S. Dollar Index was up 1.15% year to date and hit a 52-week high of 101.80 on June 24 before standing at 99.4 as of 5:32 a.m. ET on Wednesday.

Charu Chanana, chief investment strategist at Saxo, said higher Treasury yields do not automatically support the dollar if investors see the move as reflecting fiscal risk, heavier government borrowing or persistent inflation rather than stronger U.S. growth or tighter Fed policy. She said the traditional link between Treasury yields and dollar strength still matters, but investors should ask why U.S. yields are rising. Societe Generale's Kit Juckes said softer U.S. consumption, inflation and employment data have led investors to reassess rate expectations and trim bullish dollar positions, and he said the dollar index could drift into a 95-100 range for the rest of the year.

George Saravelos, global head of FX research at Deutsche Bank, said uncertainty over the Fed's inflation reaction function is another negative for the dollar. He pointed to mixed signals from Federal Reserve Chair Kevin Warsh on the central bank's inflation target and toolkit, and said the ambiguity is ultimately dollar-negative. Elias Haddad, vice president and global head of markets strategy for foreign exchange at Brown Brothers Harriman, said a stock market correction may be less damaging to the dollar than some investors expect, noting that foreign purchases of U.S. stocks reached $920 billion in the 12 months to June versus $294 billion for Treasuries.