It was another terrible week for USD after an announcement on Friday that Bear Stearns, the fifth largest US securities firm was on the verge of running out of cash and in need of a bailout by the Fed. The shock of the news sent the dollar below 100 to the yen and the Swiss and further record lows against the euro.
Next week attention will quickly turn its focus to the rate decision on Tuesday.  Most analysis were looking for a 50bp cut, but with Friday’s news now affecting trade, There are increased expectations of a 75bp or even an unprecedented 100bp cut. In short, US rates continue to decline and both fundamentals and sentiment show no mercy to dollar.
The Federal Reserve reduced the rate on direct loans to commercial banks by a quarter-point to 3.25 percent before Asian financial markets opened today. It is likely to lower its target rate for overnight loans between banks tomorrow to at least 2.25 percent from 3 percent.
Lower borrowing costs work against the dollar by making fixed-income securities issued by the government less appealing to global investors.

The market is still trending higher, breaking above 2.0226 and with new resistance now holding at 2.0397.