A record drop in Euro-zone CPI and rising unemployment leaves the odds in favor of rate cut by the European Central Bank on Thursday.

The US dollar remains within the range it has held to since the start of November, and for what it’s worth, day-to-day moves signal little more than consolidation.

The US dollar ended the day higher versus most of the majors, but fell versus the currencies that tend to gain the most during times of risk aversion.

The US dollar generally ended the week lower across the majors, but lacked the momentum to yield the breakouts expected amidst the low volume trading typical of US market holidays.

The US dollar generally ended the week lower across the majors, but lacked the momentum to yield the breakouts expected amidst the low volume trading typical of US market holidays.

Traditional fundamentals were painting a dour picture of the US economy; but the greenback was nonetheless rising into the holiday liquidity drain.

The US dollar fell sharply across the majors as US data was broadly disappointing, adding to the pile of evidence suggesting that the nation is in the midst of recession.

The US dollar and Japanese yen – the biggest beneficiaries of flight-to-quality and deleveraging – both tumbled on news that the Treasury, Federal Reserve and Federal Deposit Insurance Corp. pledged up to $306 billion to shield Citigroup from losses related to toxic assets, though the firm must absorb the first $37 billion to $40 billion in losses, while also agreeing to inject an additional $20 billion in capital.

The British pound spent much of last week consolidating above the November 13 lows of 1.4557, but left little indication of whether the next move would be a correction higher or a break down towards the next.

The US dollar was not able to make a successful break higher on Friday, as a look at the trade-weighted US dollar index (DXY) shows solid resistance at 88.35.