The risk aversion drive that has swelled since July eased significantly this past week.

In an unexpected burst of momentum in the final hours of trading this past Friday, the euro tumbled to the threshold of major support against its US and British counterparts.

The euro, in what has turned into a gauge of confidence over the past several weeks, took the collateral damage amid the capital flight from the currency bloc.

The Federal Open Market Committee's policy meeting this week is expected to hold the reins for direction and volatility for the US dollar and broader market sentiment going forward.

Fundamental conditions for the euro have not significantly improved over the past months, policy and monetary officials have simply been able to buy time.

There was tremendous build up to the opening statement at the Jackson Hole symposium by Fed Chairman Ben Bernanke this past week.

With little of note on the UK economic calendar, the British pound is set to take its cues from trends in underlying sentiment across financial markets in the week ahead.

The term "new normal" usually references a general shift in accepted expectations for an economy. However, we can apply this to currencies as well.

There's still a financial crisis simmering in Europe. Yet, with all the market headlines from the past week, it is almost possible to forget that the Euro-region is still struggling to halt the spread of fear.

European policy officials, over the past year, have taken the approach to impending financial disaster by putting out small fires only when conditions seem to be borderline crisis.