Traders haven't been this bullish on the dollar in a decade. How the buck can keep climbing.

A crowded trade for a stronger U.S. dollar is likely to hinge on whether the Wednesday jump in oil prices persists. Renewed Middle East tensions are pushing oil higher, reviving inflation concerns and reinforcing expectations that the Fed may need to keep policy tight. The knock-on effect is higher rate/yield sensitivity and potential continued FX support for the USD if oil-driven inflation fears prove durable.

Analysis

A crowded trade for a stronger U.S. dollar is likely to hinge on whether the Wednesday jump in oil prices persists. Renewed Middle East tensions are pushing oil higher, reviving inflation concerns and reinforcing expectations that the Fed may need to keep policy tight. The knock-on effect is higher rate/yield sensitivity and potential continued FX support for the USD if oil-driven inflation fears prove durable.