This week promises to be very important for the US dollar as there will be many fundamental reports, including the very important non-farm payrolls. Will they confirm the tendency of the US economy to improve, increasing the probability of an interest rates hike? The answer to this question can define the behavior of the US currency for a long time.

The euro surged last week as the European leaders made some preliminary agreements about resolving the sovereign debt crisis. The improving sentiment about the ability of Japan to recover from the disaster also helped the currency. Can the shared European currency maintain its upward momentum this week?

The Japanese yen rose sharply on the last Friday after the earthquake hit the country, spurring risk aversion and demand for the currency as a safe haven. Today the currency slipped as the government and the central bank attempt to deal with the results of the disaster. Can the Japanese currency still profit from the fears, caused by the tremor, or it’s going to extend its losses?

Last week was very important for the US dollar because the currency reversed its bearish trend and strengthened versus most of its counterparts. This week can be even more important as it may confirm the trend or break it.

The euro experienced a staggering slide in 2010, but it wasn’t as impressive as many pessimistic forecasts would let us believe. Still, the debt problems in the European Union persist and the crisis is spreading, therefore 2011 doesn’t look like a very good year for the shared European currency.

The US dollar was weakening in 2010 amid the concerns about the US economy and as the quantitative easing damped the appeal of the currency. On the other hand, the dollar managed to rise somewhat recently. What the future holds for the US currency this year?

The Australian dollar showed a good performance in the first half of the last week, but has slowed its gains in the second. What can we expect from the Aussie in the next week, can it reach parity with the US dollar?

The Canadian dollar declined last week. One of the major reasons for the underperformance was the economic tightening measures in China. The ensued speculation about China’s plans to cool its economy weakened the growth-related currencies and caused the decline of the prices for crude oil, the biggest Canada’s export. The concerns about the actions of the Chinese government will cause pressure on the Canadian currency.

The Japanese yen demonstrated yesterday the same pattern as other currencies as it was highly volatile, yet closed near its opening level. Unlike some other currencies it managed to close above the opening level against most currencies.

The outlook for the Canadian dollar improved after Canada’s central bank raised the interest rates and issued the statement, which was much more hawkish than expected. Still, the uncertainty about the global economic growth will likely limit the potential loonie’s gains.