The trade-weighted US Dollar Index (DXY) closed above key resistance at 88 for the first time since 2006.

The US dollar initially weakened versus the euro upon the release of US inflation figures, only to rebound in the afternoon as dim prospects for an auto industry bailout lead stocks lower and boosted demand for safe-haven assets.

The release of the minutes from the Federal Open Market Committee's October meeting could garner even more attention than the US CPI figures as they will give clearer insight into the Fed's bias going forward.

The US dollar’s strong open on Sunday was followed by weakness throughout the European and US trading sessions.

Federal Reserve meeting minutes present event risk next week.

There’s quite a bit of downside risk for this particular Advance Retail Sales release, with disappointing readings likely to lead the US dollar lower for at least a brief time, though if risk trends remain in play, flight-to-safety could actually lead the “safe haven” currency higher.

The US dollar rose versus most of the majors, with the exception of the Japanese yen, as concerns about the health of the financial markets triggered an increase in demand for safe haven assets and a further unwinding of carry trades.

The US dollar gained nearly 1.5 percent versus the British pound and almost 2 percent against the euro, and as usual, this was primarily the result of flight-to-quality.

Despite a surge in the euro at the start of trading on Sunday, the currency eventually floundered during Monday’s US trading session amidst dovish comments from European Central Bank President Jean-Claude Trichet.

European currencies including the euro, British pound, and Swiss franc were hit hard on Thursday as three of the biggest central banks in the continent – the European Central Bank, the Bank of England, and Swiss National Bank – all slashed interest rates.