Could it be that Wall Street jumped on to the rising dollar bandwagon just a bit too late?
 
Though talk of the rising dollar has been almost as ubiquitous in the financial press in recent months as talk about falling oil prices, the dollar has been giving up some of its gains lately.
 
The WSJ Dollar Index, a broad measure of the greenback’s strength against a basket of currencies, fell 0.9% Monday to 86.66 and has declined in five of the past six trading sessions. “The dollar’s run lower continues to reflect investor hesitation over U.S. interest rates, as well as their sense that the currency has strengthened too much, too quickly,” writes the Wall Street Journal’s James Ramage.
 
But is the past week’s activity a blip in an otherwise onward and upward dollar. Or are we witnessing the beginning of a turnaround, or at least a topping out of the dollar’s rise relative to the euro and Asian currencies.
 
A big reason for the recent fall-off in the dollar is tied to the market’s belief that the Fed is planning to delay its next round of interest rate hikes. A currency tends to gain when investors believe that short-term rates of a country that issues that currency will head up and be more attractive to bond investors from around the world. And rising rates are often associated with a rising economy, another reason for a currency to gain in value.
 
Not surprisingly, dovish comments by Federal Reserve Chair Janet Yellen last Wednesday has led to the belief that the U.S. central bank won’t begin rating rates until the fall at the earliest.
 
Writing in the Washington Post Monday, blogger Matt O’Brien argues that the dollar’s surge may be over, thanks largely to Yellen’s Fed.
“Even though the Fed really, really wants to raise rates—which it’s told us that it does—it’s really, really hard to justify that now,” writes O’Brien. “There’s no inflation, no bubbly behavior, just no reason to increase rates anytime soon. And that would mean there isn’t any more reason for the dollar to go up. Markets already know that rates are going to be super-low, negative even, in Europe, but if they’re not going to be higher in the U.S., then half the story about why the dollar should continue rising against the euro would disappear.”
 
So if indeed the dollar’s recent reversal of course is for real, what’s the best way to play it?
 
As someone who regularly monitors the financial media, stories on this topic are few and far between.

In fact, most recent stories that discuss the investment implications of the dollar still assume that conditions are in place for a rising, not falling, dollar.
 
But David Sterman, a veteran writer with Street Authority, has penned an intriguing piece that talks about country markets that are “on sale” and could be great investments, particularly if the dollar starts to fall relative to other currencies for many months.
“We may be closer to the end of the currency shifts than many realize,” writes Sterman. “History suggests that the dollar’s strengthening phase is already sowing the seeds of its own eventual reversal” as the exports of countries like Turkey and Mexico benefit from the strong dollar and weak local currencies.
 
One way to play Mexico is through the Mexico iShares ETF.
 
That reversal may have begun.