News Analysis: Investors bullish on U.S. dollar in Q2 (3)

Meanwhile, it' s almost a market consensus that the Japanese yen would sharply depreciate against the dollar in the second quarter of the year.

The yen showed obvious declining trend since last November when the newly elected Japanese Prime Minister Shinzo Abe was campaigning for the position and won supports by playing the card of revitalizing the economy.

Abe has been inclined to pressure the Bank of Japan to launch more easing measures to fight the deflation which has lasted for two decades in the country. He also replaced the former BOJ governor Masaaki Shirakawa, who is known as reluctant to implement loose monetary policy, with Haruhiko Kuroda.

Kuroda has repeatedly said that the central bank would do whatever it takes to reach the 2 percent inflation target and investors expect him to take real actions after his first BOJ policy meeting in early April.

"Obviously, the BOJ has disappointed expectations but given the determination and resolution of the new decision markers to reflate the economy, I think the risk is that they will actually for a change do more what the market expects them to do," said Longis.

The Oppenheimer currency analysts team predict the yen can continue its downward trend aggressively throughout the year and the dollar/ yen rate could be higher than 100 by the middle of year.

Meanwhile, the confirmation that Britain's GDP fell by 0.3 percent in the final quarter of 2012 raised speculations that the country' s policymakers would take more aggressive easing moves, which will pull down the pound' s rate versus the dollar.

At the end of 2012, GDP sank and the trade deficit shot up to 9.6 billion pounds in the final quarter, up from 8.1 billion pounds in the preceding three months, and such poor performance will continue in the first quarter of 2013, said Glenn Uniacke, the head of options trading at Moneycorp.

"The chances of a triple dip recession just crept up from 50-50 to odds on. Such concerns have weighed heavily on sterling," he said.