The U.S. dollar is the topic du jour this year and seems to be a key factor behind the performance of various asset classes. The Federal Reserve caught the markets off-guard last week, meaningfully dropping their interest rate expectations and moving to a more data-dependent stance on rate hikes. With the markets universally bullish toward the dollar, shifting Fed expectations drove volatility in the currency and may alter near term asset class performance. The dollars rapid reversal reinforces a key investment principlebe wary when market behavior/sentiment is at an extreme (either overly bullish or pessimistic). So where does the currency go from here? We believe the multi-year dollar bull market remains intact. Even though the valuation of the dollar has grown increasingly less attractive, there seems little on the horizon that would jeopardize the bull market. The dollars performance continues to track very closely to the 1979-1999 cycle as shown in the chart (right). Heading into 2015, we believed the currencys uptrend would continue, but at a slower and more volatile pace. We still think this view makes sense. Should the dollar trend consolidate or even pull back further, we will likely see more global markets and sectors participate in the advance, including areas like energy and emerging markets.