With the stock and bond markets closed for Independence Day in the US, the foreign exchange market was extraordinarily quiet. The dollar has fluctuated within a tight range against the Euro and Japanese Yen as the non-committal nature of the Federal Reserve and the European Bank leave little direction for the US dollar, let alone the EUR/USD. The economic calendar next week is also very light. The only pieces of data worth watching are pending home sales, the trade balance and the preliminary release of Consumer Confidence by the University of Michigan. Most of these numbers should be weak, but the impact on the US dollar could be minimal. The only thing that can have a meaningful impact on the dollar is the G8 meeting in Japan which will be held from July 7 to July 9. Last month was the finance ministers meeting, which proved to be a non-event for the US dollar. However going into that meeting, there was a lot of speculation about the possibility of currency intervention and a major change to the language relating to currencies in the communiqué. Inflation is a problem that central banks around the world are struggling with and the part of the reason why inflation has gotten to current levels is US dollar weakness. Official opposition to further dollar weakness by the G8 would trigger a major turn in the US dollar, one that could take USD/JPY towards 110 and the EUR/USD below 1.55. Read full article at forexblogg