Companies are bemoaning the strongest dollar in 20 years. Here's what experts say to expect for the greenback in the next few months.

A banner year for US dollar strength is being flagged as a pain point by multinational companies, and it may take months before a sustainable decline in the dollar takes hold, analysts say.

Apple, Pfizer, and other large corporations have told investors their financial results may be affected by foreign exchange fluctuations which this year features the dollar shooting up to a two-decade high against a widely watched basket of currencies.

The Federal Reserve's response to inflation is at the center of the dollar's ascent in relative value. When the US Dollar Index reached above 104, it increased 10%. The index was at 103 on Friday, but may not go much lower over the next few months.

In the next three to six months, I think 100 to 105 is where the dollar will be trading, according to a market analyst.

The US Dollar Index shows the performance of the US dollar against a number of foreign currencies.

Bank of America said in a Friday note that the DXY is "overbought" and is showing the start of a correction. BofA technical strategist Paul Ciana wrote that with no visible DXY top, it is possible the DXY trends to 110 this summer.

Dollar demand.

Dollar strength can make products more expensive for holders of other currencies. When converted back to dollars, the value of their international sales is lowered. The S&P 500 companies generate 42% of their revenues outside the US.

Apple said that foreign exchange is an issue with the dollar being strong at this point.

Meta Platforms expects foreign currency to affect revenue growth in the second quarter. Pfizer said its negative impact from exchange rate changes had increased to $2 billion from $1.1 billion, but the COVID vaccine maker held its revenue projection at $98 billion to $102 billion.

The chief financial officer at P&G said on the company's third-quarter earnings call that they have seen another step in cost pressures and foreign exchange rates have moved further against them.

The Fed signaled last year that it would raise interest rates to cool inflation. US consumer price inflation was 8.3% in April.

Rate-hike expectations have pushed US Treasury bond yields to multi-year highs, making them attractive to foreign investors comparing debt from other countries, such as Japan, that offer relatively lower return rates. Demand for the dollar and its value will be driven by investors who will sell foreign currencies and buy dollars to purchase US bonds. The yield on the 10-year Treasury note was 2.8% on Friday. The 10-year yield in Japan was 0.24% on Friday.

Since March, the Fed has raised interest rates by 75 basis points, and a 50 basis point hike is expected at the June 14-15 meeting. The rate hikes are meant to slow the pace of economic activity.

Growth slows down.

Huw Roberts, director of analytics at Quant Insight, told Insider that a shift to fears about a US recession from inflation concerns could pose a challenge to the dollar's run-up. When the 10-year yield fell from 3% to 3% after the April inflation report showed prices easing from a 41-year high, it was a flick at that idea.

If bond yields keep falling and copper keeps falling, that tells you the markets are worried about growth. He said that if the US economy is struggling, the rest of the world is going to be struggling, so it won't necessarily be a dollar-bear call.

It might mean an end to the one-way traffic that is dollar upside. Does it open up the dollar? That is much more debatable, according to Roberts.