It seems now that the sharp loss in investor confidence in the greenback came as a combined result of the Fed's failure to raise interest rates and also Goldman Sachs' downgrading of shares for both Citigroup and General Motors. In fact, Goldman Sachs actually went as far as downgrading the whole US brokerage sector, which resulted in the sharp rise in Cable we saw last Thursday.
The Fed decision was watched more closely than normal by analysts, since on this occasion it was seen as a litmus test for the FOMC, in light of Bernanke's recent hawkish resolve to raise rates in the foreseeable future. His failure to do so last week could well have a long-term impact on the Dollar, as many are now asking whether the stagnant US economy will allow for any rate hikes at all before October.
The Euro, having made notable gains on the USD, remains steady against its other rivals, although at the present time is weakening off slightly as a result of higher-than-expected Italian PPI statistics. Here in the UK, the Sterling comes out of last week in good shape, although could well see some weakening over the coming days as a deluge of information on the bearish housing market could affect investor confidence in the GBP. This would be more likely to affect the GBP/EUR rate rather than Cable, since the greenback is currently suffering the same setbacks as the Sterling.
All eyes are looking ahead, though, and specifically to Thursday's coming information releases. As a result of a US public holiday this coming Friday, the market-moving Non-Farm Payrolls report is scheduled for release a day earlier than expected, which means that it will be made public at the same time as the ECB's interest rate decision. The recent trend has leaned towards grim US economic data and consistent hawkishness from Trichet; if these both manifest themselves this coming Thursday, a poor NFP outcome and a 0.25% increase in the Euro's interest rate could bring further misery to ailing greenback.