The US dollar is weaker today after the Federal Reserve failed to deliver the degree of hawkishness that the market was anticipating.

Consumer confidence rose to the highest level in almost five years as better employment prospects supported optimism in the world’s largest economy.

This week is make it or break it week for the US dollar.

The US dollar staged quite a turnaround this week despite the lack of any significant data. Over the past few weeks, other central banks have proven to be less hawkish than the market had anticipated while upside surprises in US data continues to give traders confidence that the Federal Reserve will keep interest rates at 5.25 percent throughout the first half of the year.

The foreign exchange market continued to be pro-dollars as it sent the greenback higher against every major currency except for the Japanese yen.

The US dollar is higher today against most of the other major currencies, but this was not due to any dollar positive news. Instead, the lack of any US data actually helped the dollar benefit from weakness elsewhere.

President Bush is set to give his State of the Union Address tonight and the US dollar is weaker going into it.

When currencies behave very differently against the US dollar for days at a time, it tells us that not only is the direction in the market unclear, but there are also counteracting forces preventing the currency from moving in one direction.

The price action in the US dollar over the past week suggests that there may no longer be any buyers left in the market.