At the end of the trading week the greenback was trading lower against the majors. Broad based selling of the dollar was seen with the greenback down following differentiating interest rate expectations between the US and the rest of Europe. Rising inflationary pressures in both the EU and in Britain may force those respective central banks to raise their benchmark interest rates to fight off rising inflation.
US inflationary pressures are considerably less as the Federal Reserve continues with the loosening of monetary policy. The Fed has given no signal of its intention to abandon its quantitative easing program and looks to complete the purchase of $600 billion worth of treasury bonds.
The dollar could continue to decline this week if momentum carries short dollar positions further. The key events for the dollar will be Tuesday's release of consumer confidence numbers, Wednesday's Federal Reserve Open Market Committee meeting, and Friday's Advanced GDP data for the 4Q 2010.