The USD is fairly steady this morning having eased a little over the last few sessions following a jump in oil prices ($122 per barrel) which is seen as a negative for the currency. Boosting the dollar overnight were comments from Fed's Thomas Hoenig who forecast interest rates in the US will eventually need to be raised as the central bank tackles the threat f inflation. US Treasury secretary Paulson states in an interview with the WSJ that 'the worst is likely to be behind us'.
In contrast the market appears to favour the view that the ECB is facing mounting signs of a slowing euro zone economy that may well see a rate cut on the cards. But for now the ECB and Trichet in particular is firmly focussed on the rise in inflationary pressures within the EZ.
So FX markets looking fairly stable for now and an argument can be made for either direction for the next major Trend.