The Federal Reserve is finally being a bit more realistic about the downside risks to growth.

Though the US dollar started out the week by plummeting lower against the majors, the currency ended Monday virtually unchanged.

The US dollar continued to rally on Friday, helped by a rise in the University of Michigan/Reuters US consumer confidence survey.

The US dollar index finally managed to rise above critical resistance from a falling trendline connecting the late 2005-2007 highs, indicating that the currency’s rally is not over quite yet.

Will inflation data revive the greenback?

The US dollar rally stalled out against the euro, Japanese yen, and Canadian dollar on Tuesday amidst somewhat-dovish commentary by Minneapolis Fed President Gary Stern.

The US dollar rally showed few signs of exhaustion on Monday, as the currency rocketed higher across the majors despite there being absolutely no economic data on hand.  However, there are technical indications that the greenback could be due for a pause.

If you didn’t believe the US dollar could last on Thursday, you probably changed your mind on Friday as the US dollar rally went on undisturbed and broke through critical resistance levels.

The US dollar gained across the majors on Wednesday as the FOMC’s policy statement failed to quell speculation of 75 basis points worth of rate hikes over the next 12 months.

The Federal Reserve left rates unchanged at 2.00 percent, but it was the FOMC’s policy statement that made all the difference for the US dollar.