There are two questions that I am looking forward to be answered this week and both of them are related to the US dollar.

1. Will the dollar keep losing ground?
2. What will the FOMC statement say?

Since the beginning of September the dollar's decline has been as smooth as a bunny slope ski ride. At the end of last week, however, it seemed that this ride is coming to an end. After storming the 1.475 level the dollar kept flirting with the 1.47 line for the whole Friday. It is quite possible that the current trend is out of steam, at least until the FOMC comes with their view of what comes next. There are two outcomes that are almost sure to emerge from the Fed meeting. First, the interest rate will remain unchanged since inflation is obviously too tame to cause any policy change. Second, it looks like the quantitative easing has run its course and the Fed should be back to business as usual. The FOMC statement should answer, however, the important question of what are the inflation expectations moving forward, and how the Fed plans to answer any changes in the current status in the future. Trichet already had his say on the topic:

Available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the Governing Council’s aim of keeping inflation rates below, but close to, 2% over the medium term. The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, as money and credit expansion continues to decelerate.

Now, its time to see what is the US view on the subject, but most probably it will be on the same note. In this line, I expect the EURUSD to remain in the 1.465-1.475 range until Wednesday, when the Fed position becomes clear. Bearing any unexpected developments, the dollar then may continue to lose value, where my personal opinion is that it can cross 1.485 to the end of the week.