'Significant Development'

The dollar has gained 1.3 percent this month and is down 0.5 percent so far this year, and the Dow Jones Industrial Average rose to 13,289 March 16, the highest level since December 2007, and gained 8.3 percent in 2012.

"Typically when we see the Dow up, the dollar is down and that hasn't happened," said Woolfolk of Bank of New York Mellon. "That is a very significant development that's happened rarely since the Lehman crisis."

Stronger economic data this year damped market expectations of further monetary stimulus after the Fed bought $2.3 trillion of Treasuries and mortgage-backed bonds in two rounds of purchases known as quantitative easing from December 2008 to June 2011. During the second program, which started in November 2010, the Dollar Index fell 3.9 percent.

'Downside Risks'

Sixty-one percent of respondents in a March 9-12 Bloomberg News survey of economists said Bernanke would refrain from any action to expand the Fed's $2.89 trillion balance sheet this year. In January, 50 percent predicted more bond buying.

With unemployment at 8.3 percent, above the 10-year average of 6.6 percent, the Fed isn't ruling out further moves. Strains in financial markets pose "significant downside risks" central bankers said in a statement after the March 13 meeting.

Possible further stimulus, as well as the Fed's forecast of rates at zero to 0.25 percent through late 2014, will limit dollar gains, according to Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc.

"In order to have a real pronounced dollar move we need to have an actual hiking cycle" for interest rates, Nordvig said in a March 14 telephone interview. "As long as we're in an adjustment phase where U.S. growth expectations are being revised higher, the dollar can gain further in conjunction with risk assets doing OK."

Strengthening Recovery

The currency has moved higher as U.S. economic data show a strengthening recovery. Employers in February added 227,000 jobs following a revised 284,000 gain in January and the jobless rate remained at a three-year low. Retail sales in February rose by 1.1 percent, the most since September.

Euro zone economies contracted 0.3 percent in the fourth quarter, while Japan shrunk 0.7 percent and the U.K fell 0.2 percent, according to government data.