The U.S. dollar was down on Monday morning in Asia, ending its weeks-long rally.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.28% to 100.148 by 11:30 AM ET (4:30 AM GMT).
Investors flocked to the dollar in recent weeks amid continuing economic turbulence due to the COVID-19 pandemic, leading to safe-haven inflows and a dollar shortage.
But some analysts said that the dollar will continue its fall in the long term as the U.S. Federal Reserve eased monetary policy more aggressively compared to other central banks.
Meanwhile, the USD/JPY pair was down 0.13% to 107.35 as the Bank of Japan started its monetary policy meeting on Monday. The Japanese central bank is expected to consider removing limits on bond purchases and easing funding for COVID-19-hit companies.
But some investors were doubtful of what the meeting could achieve.
“It will be difficult for markets to latch onto the BOJ, because it has already reached the limit of what it can do,” Takuya Kanda, general manager of the research department at Gaitame.com Research Institute, told CNBC.
“Every economy is suffering, and all major central banks have already eased policy a lot, so it’s difficult to differentiate from one currency to the next,” be added.
Investors will additionally be monitoring news from other central bank meetings this week, with a Fed meeting scheduled to end on Wednesday and Thursday’s European Central Bank (ECB) meeting.
The AUD/USD pair gained 0.78% to 0.6434 while the NZD/USD pair gained 0.45% to 0.6045 as gains in stocks increased investor confidence in the Antipodean risk currencies.
The USD/CNY fell 0.04% to 7.0784. The GBP/USD pair gained 0.28% to 1.2402 as British Prime Minister Boris Johnson is expected to announce an easing of the month-long lockdown this week on Monday.
Johnson is returning to work on Monday after battling COVID-19.