A little fatigue caught up with the speedy US dollar, pulling it below its strongest level in a dozen years versus the euro and a currency basket. The dollar’s upswing kicked into a higher gear this week after the European Central Bank implemented a mammoth bond-buying programme that has driven area interest rates sharply lower, diluting the euro’s value. Europe’s low rate policies compare to growing expectations for the Federal Reserve to take American borrowing rates higher with the US economy growing at a steady clip and producing healthy job growth. Caution also set in to tap the brakes on the greenback’s torrid tear that has also taken it to 20-month peaks under $1.50 versus the pound and to eight-year highs against the yen.

Euro

The fast falling euro finally caught a break as it bounced above fresh dozen year lows. The euro’s months-long slide gathered pace this week. The impact of the bank’s trillion euro programme has been immediate, sending area interest rates sharply lower, which has watered down the euro’s value. The euro’s bounce should prove short-lived as decidedly bearish sentiment will leave it vulnerable to fresh selling pressure and at growing risk of a fall to and maybe below parity.

Sterling

The smallest UK trade deficit in nearly a year helped sterling rebound from 20-month lows under against the greenback. The pound was the latest currency this week to plunge to fresh lows against its rapidly outperforming US counterpart. But in a reminder of Britain’s still solid economic fundamentals, the nation’s trade gap improved more than expected, narrowing to a March 2014 low of £8.41 billion in January from a downwardly revised £9.93 billion. Although the UK economy remains on a stable footing, sterling has faced stronger headwinds of late in growing unease ahead of spring elections and the accelerated slide in the euro against the dollar.

US dollar

Already off to a subdued start to the session, the dollar lost more ground after disappointing news on the all-important US consumer. Retail sales unexpectedly sank in February and core spending was flat. Though disappointing, Mother Nature likely kept consumers from spending which suggests activity could soon bounce back when the weather improves. Jobless claims beat expectations. Heading into next week, the pace of any further dollar appreciation could slow on uncertainty over the outcome of the Fed decision on March 18.