Data has been strong enough heading into year-end to prevent market participants from making strong conclusions on the likely timing of the end of the Fed's tightening cycle, and in this environment the dollar is likely to remain well-supported for now.

Further evidence of stability in the housing market and solid retail activity could prompt a rethink of MPC easing risk now priced in, allowing the euro to retreat sharply against the pound.

The better tone in global equity markets as crude prices moderate a bit has helped ease risk aversion concerns, to the dollar's benefit.

The FX market is watching interest rate markets and short- end yields have come off and that's because core CPI was tame. For the dollar to continue to do well, you need interest rate expectations to continue to move in its favor, and with a fair amount of tightening already priced in, that's getting harder and harder.

The yen continued to strengthen this morning at the expense of high yielding currencies such as Australian and New Zealand dollars as well as the US dollar.

It's got to be the yen. That is the currency with the lowest yield and borrowers can be comfortable that the BOJ is not going to significantly boost their funding costs over the course of the year.