The baht, which has appreciated to a seven-month high past 33 to the dollar, could strengthen further if the Federal Reserve sends a clear signal at its meeting this week that it is prepared to cut the US rate at its next meeting in June, says Kasikorn Research Center (K-Research).
The baht was quoted at 32.80 to the greenback at midday Tuesday, strengthening from Friday's close of 33.06 after appreciating beyond 33 to the dollar on Monday.
The Chinese yuan and Taiwan dollar led regional gains against the dollar as investors monitored progress on a trade deal between the world's two largest economies.
In Hong Kong, authorities ramped up sales of the local dollar as the greenback's slide threatened the foreign exchange peg.
According to Bloomberg, the Hong Kong Monetary Authority sold a record HK$60.5 billion ($7.8 billion) of the city's currency, after it tested the upper end of its trading band.
"The yuan jumped to a 45-day high and other Asian currencies also gained on hopes of a thaw in the Sino-US trade war," said Kanjana Chockpisansin, head of research, banking and the financial sector at K-Research.
She said this week all eyes are on the Fed's Federal Open Market Committee, as analysts anticipate it to leave interest rates unchanged at 4.25-4.5% when the meeting wraps up on May 7.
Maintaining the rate could support a short-term rebound of the dollar, which has struggled to hold its ground amid US recession fears, said Ms Kanjana.
"If the Fed maintains the rate this month, but sends a clear signal it is ready to cut the rate at its next meeting, the dollar will be under pressure and weaken again," she told the Bangkok Post.
"In our view, it is unlikely the US currency will recover easily."
According to CME FedWatch Tool data on May 5, there was a 96% probability the Fed will keep rates at 4.25-4.50%.
Markets now imply a 37% chance of a Fed cut in June, down from 64% a month ago. Goldman Sachs and Barclays both shifted their cut calls to July from June.
The euro edged up 0.3% to $1.1333, away from last week's low at $1.1266, while the dollar index dipped 0.2% to 99.717.
The dollar eased 0.4% to ¥144.21, away from Friday's top of ¥145.91.