Dollar slumps as banking crisis chips away at its haven status and makes further Fed rate hikes a coin flip

• The US dollar has slipped 2% over five trading days as the banking crisis rattles investors.
• The collapse of SVB and Signature Bank may threaten the greenback's haven status, one analyst said.
• Traders are unsure whether the Federal Reserve will keep raising interest rates or ease off for now.

The dollar extended its losing streak Wednesday after the Federal Reserve raised interest rates by 25 basis points. Traders had expected the move, but it still fueled uncertainty about the outlook for rates and the US economy as the regional-banking crisis continues to rattle markets.

The US Dollar Index – which tracks the greenback against a basket of six other currencies – slipped 1% on Wednesday, taking its total retreat to 2% over the last five trading days. It traded flat early Thursday.

The buck's run of losses follows the collapse of Silicon Valley Bank and Signature Bank earlier this month. Fears of further bank runs and more lenders failing have hammered the stock prices of regional banks such as First Republic and Western Alliance.

The turmoil has chipped away at the dollar's long-established status as a "haven" currency that can be confidently held by investors during times of volatility, according to one analyst.

"The US dollar and the Swiss franc are easily the weakest of the majors," Westpac Bank strategist Sean Callow told CNBC's "Street Signs Asia" Thursday, referring to the franc falling around 1% since the rescue of Credit Suisse last week. "They're not getting that traditional safe-haven demand."

The banking crisis has also fueled uncertainty about whether the Fed will keep raising rates, refrain from further hikes, or even cut them as it weighs the threat of inflation against the risk of ramping up pressure on lenders.

The central bank pressed ahead with its war on inflation Wednesday. However, traders are now 50-50 on whether it will approve another rate hike at its next meeting in May, according to CME Group's FedWatch tool.

The Fed shying away from hikes could also weigh on the dollar. When rates stop rising, foreign investors seeking higher yields look for other places to invest.

Read more: The Fed's latest move confirms it's trying to thread the needle between cooling inflation and helping banks in turmoil