The dollar has surged dramatically against the Euro and registered more modest gains versus the Euro. I think a top is now in place for the Euro and the comments by Trichet yesterday were the catalyst for the crash of the Euro.The market action reflects the economic fundamentals away from the US. Economic data released in Europe and Japan recently are reflective of economies slowing quickly and even tipping into recession. The central banks in each country have yet to respond to the changed set of circumstances and the economic weakness which has derived from the global credit crunch.
In addition the crash of oil and gold has some suggesting that the bull market in the commodity market has been broken. If so there are many short the dollar against commodity currencies such as Australia ,New Zealand and Canada who will soon be seeking cover.
Longer term the US faces some very severe problems. (All declining empires do.) In the short and intermediate term though, it looks as though the policy response to the credit crunch on this side of the ocean have been more meaningful and more decisive than that of the ECB. That policy advantage by the Federal Reserve should give the dollar breathing room for the next 12 months or so.