NEW YORK ( TheStreet) -- The beating for the U.S. dollar following last week's Standard & Poor's downgrade of U.S. debt outlook isn't over yet.
Last week, the dollar showed some resistance against the downgrade as inflation readings rose in March and comments from an influential policymaker heightened anticipation of monetary tightening.
However, the spike was short-lived and the greenback has been sitting in the red since last Tuesday and has extended losses on Monday.
"Some traders have been moving away from dollars and into alternatives such as gold and higher yielding 'commodity' currencies such as the Australian and Canadian Dollars," said Mike Zarembski, senior commodity analyst at optionsXpress.Zarembski said the dollar index futures fell to lows not seen since the summer of 2008. The U.S. dollar index was falling 0.2% to $73.97, with the euro up 0.2% against the dollar at $1.4594 despite the European Union's sovereign debt woes, especially prominent in Greece, Portugal, and Ireland. Still, Zarembski cautioned, "though it appears that the dollar still has some room to move even lower, the large percentage of traders already short the dollar could trigger a major short-covering rally should some catalyst occur." The trigger could be an announcement of a restructuring of Greek debt or a major spread of political unrest in the Middle East. Waverly Advisors strategist Andrew Barber said his firm is looking to reestablish at least a partial short position in the U.S. dollar. For now, Waverly Advisors' only currency position is a full long position in the AUD/USD, which is working well in the firm's favor, according to Barber. The Australian dollar was trading sideways against its U.S. counterpart at $1.0737. PowerShares DB US Dollar Index Bearish (UDN) has been trading sideways at $28.82, while CurrencyShares Euro Trust (FXE) was adding 0.4% to $145.54. Rydex CurrencyShares Australian Dollar Trust (FXA) was trading sideways at $107.76. PowerShares DB US Dollar Index Bullish (UUP) was losing 0.2% to $21.20. CurrencyShares Swiss Franc Trust (FXF) was up 0.6% to $112.59. CurrencyShares Japanese Yen Trust (FXY) was falling 0.3% to $120.31 and WisdomTree Dreyfus Chinese Yuan Fund (CYB) was rising 0.1% to $25.72. -- Written by Andrea Tse in New York. Readers Also Like: >>Cramer: Keep Buying Silver >>5 Bitter Feuds on Wall Street