MUFG Research expects the USD sell-off to extend and accelerate over the coming weeks.
"The USD has weakened over the past week in anticipation that Joe Biden is on the verge of becoming the next US President. It has resulted in the dollar index falling back towards the bottom of the recent trading range between the 92.000 and 94.000- levels which has been in place since late July," MUFG notes.
"So far the USD sell-off has been relatively modest as most G10 currency pairs continue to trade within recent rages. It has triggered a reversal lower for implied vols which had been elevated in the run up to the election. On exception has been USD/JPY which has fallen to its’ lowest levels since March after breaking below support at the 104.00-level. USD weakness could accelerate more broadly with USD/CAD (@ 1.3000), USD/CHF (@ 0.9000), NZD/USD (@ 0.6800), and USD/SEK (@ 8.6000) all testing key support levels," MUFG adds.