MUFG Research discusses the USD outlook and flags a scope for further gains in Q1 against the JPY, CHF, and CAD.

"We see strong grounds for reflation optimism being sustained in the coming weeks. In Q4, JPY and CAD were the two worst performing currencies in Q4 when the dollar weakened more broadly and we with the added confidence on the US economy and our view that the Canadian economy will show further weakness both JPY and CAD could renew its Q4 trend of under-performance. So we see the dollar advancing more against negative yielding risk-on currencies like JPY, CHF and to a lesser extent EUR. Renewed reflation optimism however will also benefit EM FX. But in G10 generally we would expect the dollar to perform better than it did in Q4"