Economists see US inflation at a 49-year high of 7.00%, four rate hikes are eyed next year and traders have bought a lot of dollars. With the majority prepared for higher inflation and more tightening, there is a growing risk of disappointment and a dollar dip.

Those who think the dollar will rise further might utilise this dip to hedge for that eventuality, while those who are currently long might be well advised to take some profits.

The dollar's impressive turn, which saw it rise 6.80% last year, has led traders to flip a $34-billion short position to a $19-billion long.

This extreme change is matched by the huge shift in thinking for US interest rates, which are now seen rising swiftly, while the COVID-19 pandemic that was the basis for interest rates holding at low levels has endured.

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This may be a good time to hedge the risk that markets have got ahead of themselves. A 3% reverse would be healthy for the dollar's uptrend.