Bringing forward expectations of a Fed hike from May-June to March was worth something for the dollar, but to get more now, the market may need to recognize the risk of three (or more) hikes this year. With the strong February jobs growth and a 2.8% year-over-year increase in hourly earnings, rarely does the market’s confidence in an event surpass current expectations for a hike on March 15.

However, the market sees around a one-in-three or a one-in-four chance of a third hike this year. The risks for the updated forecasts from the Federal Reserve seem asymmetrically tilted higher, more rate hikes than fewer by more members. The hawkishness of regional presidents may be underestimated. The data and the global climate are conducive for expediting the normalization process. The hawks will likely feel vindicated by recent developments and may press their case with more vigor.

The focus of the Fed has arguably shifted. Previously, the issue was whether the data would confirm that the economy was evolving toward the Fed’s targets. It did. Rather than focus on the data points per se, officials appear more confident of the direction and resilience of the economy and prices. They now are looking for opportunities, which helps explain the campaign to prepare the market for the March 15 move.

Still, the dollar’s technical tone has deteriorated, and the risk is on the downside over the next several sessions. Our working hypothesis is that the dollar’s recovery that began in early February against most of the majors ended and a correction has begun, For the Dollar Index, this means potential toward 100.75 and possibly 100.40. The former is the 50% retracement of that rally and coincides with the 100-day average (~100.80). The latter is the 61.8% retracement. Alternatively, if the Dollar Index has carved out a double top near 102.25, the neckline is around 101.20 (38.2% of the rally is ~101.10). On a break of the neckline, the measuring objective is 100.