After riding high on multi-year bull run, US dollar has still enough steam to gain 10 percent further this year. The two-day policy meeting of US Federal Reserve will set the tone for US currency.  Building up of short positions may pull US dollar lower for short period.

Investors and analysts are looking to the outcome of the two-day policy meeting of US Federal Reserve. The policy meeting is beginning from Tuesday. Andrew Sheets, an analyst at Morgan Stanley, said "We remain in a structural bull market for the US dollar, which has a further 10-15 percent to go."

Market Watch reports that the two-day policy meeting will provide enough cues on the next rate hike and next course of US dollar movement in the long run. The US economy is currently on promising note amid global economy slowdown. The US Federal Reserve is being considered as it's the only central bank among the developed nations to plan on normalizing monetary policy. 

Steven Saywell, global head of foreign exchange strategy at BNP Paribas, said "We suspect the US dollar will continue to struggle as the market will be unable to sustain pricing for increased odds of further Fed tightening." Saywell sees net short-dollar positions are at highest since fourth quarter of 2013 and this indicates short-term drop in greenback. 

Morgan Stanley says British Pound is predicted to fall against US dollar even with or without Brexit. UK will have voting on Brexit in June. Brexit-inspired selling resulted in weaker Pound in February. Though there's some recovery this month, the net depreciation since November 2015 still shows Pound weaker by 10 percent. There are still sizeable short positions in British Pound, as observed by PoundSterling Live.

The world's third largest economy, Japan, has been slipped into negative interest rate regime. European Central Bank (ECB) is enacting quantitative easing measures. On the other side, emerging economies are finding it difficult to spur up growth rates in the wake of China's economy slowdown and slump in commodities market. 

FX Street further adds that Eurodollar has finished descending wave and corrected it. It may form another descending wage with a target of 1.1080. Eurodollar may start consolidation after reaching this point. The Eurodollar may continue falling 1.0980. 

US dollar, on the other hand, is expected to continue to move upwards as long as US economy is showing strength in the global markets. Goldman Sachs forecasts nine percent rise in US dollar and it expects tightening of policy by US Federal Reserve in June. European Central Bank and Bank of Japan (BoJ) are maintaining negative interest rates. This gap between world's major economies and the US will help dollar gain further strength in days to come.