The latest talk in financial news is that of competitive devaluations. This has been brought up because of QE2, and the BOJ intervention to weaken the yen. The timing is of course late, because the dollar has gotten hammered over the past month.
I am more familiar with stocks than currencies, but from my experience, currencies are trendier than stocks in nature and sentiment is a less helpful indicator. We are getting more bearish sentiment on the dollar after the Fed announcement last week and the big rallies in the EUR, CHF, AUD, etc.
Although I do think a small bounce in the dollar is right around the corner, I would not fade this weak dollar trend over the long term as the sentiment hasn't got extreme and euro bears are still around. I would not be surprised to see euro at 1.42 by the end of the year, around the levels it was at on January 1.
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