The euro continued to strengthen throughout the overnight session, breaking out of its previous range to hold above 1.4750.

The euro retracement continued from yesterday bouncing from support at 1.4600, but following choppy price action the EUR/USD has consolidated in a range between 1.4730 and 1.4670.

The latest commentary from the Federal Reserve continues to focus on upside inflation risks, but has yet to warrant expectations of a rate hike to follow in the coming months.

Should oil continue its sharp decline and inflation expectations start to fall, it would only be a matter of time before the European Central Bank start to lower interest rates.

The US dollar has appreciated in recent weeks, as overnight index swaps signal that traders expect the Federal Reserve to raise rates by 75 basis points over the course of the next eight FOMC meetings.  However, the next release of non-farm payrolls is expected to reveal job losses for the seventh consecutive month while the US unemployment rate is anticipated to hit a 4-year high of 5.6 percent.

Inflation in Canada is expected to jump to 2.9% from 2.2%, which would put it at the top of the Bank of Canada's target band.

U.S. retail sales are expected to have increased 0.4% in June after a 1% gain the month prior.  Economists are predicting that Americans continued to spend their stimulus checks as the government has distributed $86.1 billion of the expected $100 billion planned.

This week is shaping up to be very exciting and short for the forex markets, as a slew of important economic releases and the Independence Day holiday in the US could lead to an influx in volatility.

Confidence among Americans is expected to continue to have continued falling in June.

US retail sales are due for release on Thursday and the degree of consumer spending could play a big role in determining where the US dollar may head next.