Is Artificial Strength of U.S. Dollar Coming to an End?

The unusual circumstances surrounding the underpinning of the U.S. dollar has many analysts unsure of how long that shifting foundation can last.

Forced liquidation or deleveraging has been the key reason the dollar has performed so well lately, and it's now questionable how much longer that process will remain a factor.

Once that slows down, the dollar will have tremendous downward pressure on it. Think of how that will sit with American businesses already facing major challenges from China and its currency.

Bob Sinche, head of global FX and rate strategy at The Bank of America in New York said, "Foundations for the dollar's recent rally have not been solid. The result of repatriation, deleveraging, quantitative easing and a major scarcity of dollars. But now we are bound for a correction."

It's not a matter of if, it's only a matter of when. And that seems to be coming on us pretty fast.

Another factor recently introduced is the steep and fast cuts coming from across the ocean in interest rates. That should also have some impact on weakening the dollar.

Most arguments aren't for some type of long-term wait for the downturn in the dollar. It could start any time, and could be at most, several months out. I haven't heard much about anything longer than that.

Some do think if it takes several months to happen, investors will be willing to take on more risk as economic conditions settle down - assuming they do - and other currencies may not be as attractive at that time.

One thing is for sure, the forced liquidation can't go on forever, and that will definitely undercut the strength of the dollar and put downward pressure on it.