Meanwhile, the Bloomberg Dollar Spot Index is on course for its worst July in a decade. The drop comes amid renewed calls for the dollar’s demise following a game-changing rescue package from the European Union deal, which spurred the euro and will lead to jointly issued debt.

Of course, people have been wrong-footed in calling for the dollar’s demise for years -- including when the Fed was aggressively easing in the wake of the 2008 crisis.

The ICE U.S. Dollar Index hasn’t had more than three constitutive years of annual declines since the early 1970s. That’s in part because there are few viable alternatives to dollar assets such as Treasuries, the world’s biggest bond market with nearly $20 trillion outstanding.

The dollar is used in 88% of all currency trades, according to the latest triennial Bank for International Settlements survey. And it still accounts for about 62% of the world’s foreign-exchange reserves, although that’s down from a peak of more than 85% in the 1970s, IMF data show.

The the U.S. “isn’t anywhere close to losing its reserve currency status given the depth of capital markets and overwhelming volume of U.S. dollar-denominated global transactions,” said Michael Krupkin, head of G-10 FX spot trading for the Americas, at Barclays Plc.

For Goldman, the growing level of debt in the U.S. -- which now exceeds 80% of the nation’s gross domestic product -- and elsewhere, boosts the risk that central banks and governments may allow inflation to accelerate.

Investors are poised to hear more about the Fed’s view on inflation with its latest policy decision Wednesday.

“Until we get through the Fed, the dollar could strengthen as investors lock in profits,” Edward Moya, a senior market analyst at Oanda Corp. said in a note.

--With assistance from Ranjeetha Pakiam, David Papadopoulos, Mark Tannenbaum and Susanne Barton.

This article was provided by Bloomberg News.

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