Much of the dollar's price action has to do with emerging signs of building risk appetite, such as the slow decline of the CBOE’s VIX volatility index below 40, despite the fact US economic data was broadly disappointing.

The US dollar will see a pick up in event risk tomorrow.  A gauge of conditions in US non-manufacturing sector, which accounts for approximately 70 percent of total economic activity in the country and includes retail, services, and finance, is anticipated to have worsened in December as the ISM index is estimated to fall to another record low of 37.0 from 37.3.

The euro ended last week consolidating versus the US dollar within a falling wedge formation, which is typically a bullish reversal pattern, but this can only be confirmed by a break above trendline resistance at 1.3978.

The US dollar ended the day down against its major counterparts as the Conference Board's consumer confidence survey reflected its worst readings since record-keeping began in 1967.

The US dollar ended the day up slightly against the euro and British pound, reversing sharp declines during the Asian and European trading session.

In the coming week, low liquidity conditions could persist as scattered financial markets around the globe will be closed.

What should we expect for the dollar for the rest of the week?

The US dollar has managed to hold on to last week’s gains, thus far, as lower trading volumes ahead of Thursday’s market closures has seen little in the way of volatility.

The US dollar has many fundamental reasons to pull back, however, over the next week the big question is what sort of price action will we see?

With major holidays looming on December 25 and January 1, leaving many of the world’s financial markets closed, trading volumes will fall dramatically.  Thin markets have a tendency to result in either very choppy or very quiet price action.