Currency strategists have increased forecasts for the dollar against the euro and yen this year. The greenback will trade at $1.30 per euro, down from expectations of $1.45 in September, according to a Bloomberg News survey of 53 analysts. The dollar will trade at 87 yen next year, up from 83 yen forecast earlier this year.

Treasury bonds with yields higher than their German counterparts are luring foreign investors to U.S. debt. Two-year Treasuries yield 0.36 percent, 3 basis points more than similar- maturity German bunds. Six months ago, bunds were yielding 34 basis points more than Treasuries.

'More Comfortable'

China, the largest foreign U.S. creditor, increased its holdings of U.S. government securities in January for the first time in six months, boosting them by 0.7 percent to $1.16 trillion, Treasury data released March 15 show.

Organization of Petroleum Exporting Country members boosted net purchases of government debt by $43.3 billion, or 20 percent, in the 12 months ended Jan. 31, compared to a 13 percent rise for non-OPEC foreign holdings.

"Market players feel more comfortable holding U.S. dollars," said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world's largest custodial bank, with more than $26 trillion in assets.

Traders' positions reflect the shift. The difference in the number of wagers by all commercial futures traders on a gain in the dollar versus the euro, yen, pound, Swiss franc and the Canadian, Australian and New Zealand dollars -- so-called net longs -- was 143,884 on March 13, according to CFTC data compiled by Bloomberg. Net shorts, or bets the currency will fall, totaled 387,327 a year ago.

Matching 1999

There have been more positive than negative contracts every week since Sept. 20, matching the stretch ending in July 27, 1999, which was seven months after the introduction of the euro. The Dollar Index rose 8.2 percent that year, 7.6 percent in 2000 and 6.6 percent the next year.

Another sign that the dollar is rising in reaction to a strengthening economy is that the typical relationship between the currency and stocks is breaking down.

During September 2008, as Lehman Brothers Holdings Inc. collapsed in the largest U.S. bankruptcy, the Dollar Index gained 6 percent and the Dow Jones Industrial Average slumped 34 percent as investors sought the currency to buy safe Treasuries. The next year stocks rallied 19 percent on optimism about an economic recovery while the currency gauge fell by 4.2 percent and Treasuries lost 3.72 percent as measured by Bank of America Merrill Lynch indexes.

The negative relationship between the dollar and stocks, intact since October 2008, is now breaking down, with the 60-day percent-change correlation rising to minus 43 percent last week from as low as minus 85 percent in December. A reading of minus 100 percent means that the two assets always move in the opposite direction.