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(CNN Business) —  

So much for the Federal Reserve killing the US dollar.

When Fed chair Jerome Powell signaled last month that rate hikes probably won’t happen anytime soon, many experts thought that would hurt the dollar. Powell said the central bank needed to be “patient” and see what happens next for the US economy.

Low interest rates usually go hand in hand with a weaker currency. Think of Japan and the yen during its lost decades of negative rates, deflation and a sluggish economy.

But the US Dollar Index has rallied 1.5% against other currencies after the Fed’s January 30 meeting. That has taken many by surprise.

An increase of 1.5% may not sound like a lot, but it’s actually a fairly dramatic move in the usually sleepy world of currencies. The dollar is now up slightly year-to-date.

Blue chip US companies hurt by stronger greenback

That could wind up being a problem for big US multinational companies — market leaders that are the biggest components of the Dow and S&P 500. A stronger dollar eats into the value of their international sales.

Dow components Apple (AAPL), Boeing (BA), Caterpillar (CAT) and 3M (MMM) generate a significant amount of their sales from foreign markets. Those are stocks that almost every average investor probably has some exposure to through popular ETFs or mutual funds in a 401(k) account or IRA.

A stronger dollar has already helped drag down growth at companies that have reported their fourth quarter earnings.

S&P 500 companies with more than half of their sales coming from the US have posted earnings growth of 16.6%, according to data from FactSet. That compares to growth of just 8.4% for companies with more than half of their sales generated overseas.

The strong dollar is just one of the reasons why multinational profits have lagged. Economic weakness in Europe, the UK, China, Japan and other international markets is to blame as well.

Those two things are related: If the US economy remains healthier than most other major developed and developing countries, the dollar will likely rally further.

If that happens, that could make the situation even worse for many of America’s largest companies when they report first quarter earnings in April.

China slowdown makes dollar look more attractive

Several experts do think the dollar rally has legs left in it.

Jameel Ahmad, global head of currency strategy and market research at FXTM, a foreign exchange brokerage firm, said in a report this week that investors have been attracted to the dollar because the US economy still looks to be in solid shape.

He added that “those who are fatigued from yo-yo trade headlines” about the US and China are now starting to focus on the fact “China’s moderating economic conditions remain a major overhang for the global growth narrative.”

In other words, the dollar could keep rallying if China’s growth slows further — particularly if that winds up dragging down other emerging markets with it. But if this sluggishness eventually hits the United States, most experts expect it won’t hurt America’s economic growth all that much.

That’s why the dollar may continue to be the “cleanest dirty shirt.”

“It’s not a question of people flocking to the dollar because they want to. It’s that the data from Europe and China and elsewhere has just gotten markedly worse,” said Boris Schlossberg, managing director of FX Strategy at BK Asset Management.