The US dollar closed higher against all the major currencies during the holiday shortened week. The lack of liquidity may have exaggerated the weakness of Swedish krona and Norwegian krone, the poorest performing major currencies.  Both lost about 1.5% against the greenback. 

The least weak currencies were in the dollar-bloc. The Canadian and New Zealand dollars were practically flat, and the Australian dollar slipped 0.2%.   The euro and sterling slipped about 0.5%, while the yen shed 0.7% of its recent gains. 

The lack of participation will continue into the last week of the year.  The general technical condition will not change.  The dollar's bull advance is not over.  Leaving aside the housing market, which has been one of the few US economic disappointments of 2014, the 5% Q3 GDP, coupled with continued improvement in the labor market keeps the Fed poised to raise rates in around the middle of 2015. The prospects of a more aggressive ECB, buying a wider range of assets, including sovereign bonds, will keep the euro on the defensive.   

The euro recorded a marginal new low on December 23 near $1.2165.  This is just above the 50% retracement of the euro's trading range since its launch in 1999 (~$1.2135). The bottom of the Bollinger Band (set 2 standard deviations below the 20-day moving average) is near there as well (~$1.2125).  Further out is the July 2013 low near $1.2045 and the $1.20 psychological level.  On the upside, offers in the $1.2250-75 band may contain upticks. 

Despite unprecedented expansion of the central bank's balance sheet, Japanese inflation fell to its slowest pace in six months (headline and core).   When adjusted for the sales tax increase, Japan's core CPI rose 0.7% year-over-year in November.  The 2% inflation target looks nearly as elusive as the ECB's. The dollar's recent 5.5% slide in six sessions to almost JPY115.50 shook out many of the recent dollar longs. As many of these positions are re-established, the dollar's ascent has resumed.  Initial resistance is seen in the JPY120.85-JPY121.00 area. Above there is the high from December 8 near JPY121.85.  On the other hand, a break now of JPY119.40 will warn of a more complicated correction.