FXStreet reports that analysts at MUFG Bank said that central banks are set to keep stimulus, backed by governments too. Therefore, the US dollar is expected to remain on a downward trajectory.

“The BoE as expected left its policy stance unchanged after increasing QE by GBP150 B in November. It did extend the Funding for Lending Scheme for SMEs and importantly emphasised the flexibility of the QE program.”

“The SNB unsurprisingly, countered strongly in communications after its meeting arguing that the US Treasury currency report does not adequately account for Switzerland’s particular situation. We concur with that and it is hard to layout credible grounds to show SNB action is grounded in gaining a competitive advantage through currency manipulation. The SNB message was clear – there will be no change in the monetary policy strategy.”

“The BoJ announced an extension to its COVID-19 loan programmes by a further six months to September 2021 while also adjusting the terms in order to make them more flexible. Perhaps more importantly though, the BoJ announced a full review of its monetary policy.” 

“The announcements this week certainly reinforce the prospects of loose monetary conditions and favourable risk asset performance, which led by the Fed will keep the US dollar on a weakening path.”