After spending the beginning part of the week much lower across the board, the euro found a burst of life late on Tuesday.

Panic stock market sell-offs set the stage for continued S&P weakness into what promises to be a critical week for the US dollar and broader financial markets.

Risk aversion has once against overrun the markets.

The US dollar finished at multi-week highs against the euro on a potentially pivotal week of price action, setting the stage for further rallies into the first week of post-summer trading.

Next week's economic docket is highlighted by the July new homes sales, durable goods orders, and GDP reports.

A dismal week for the Dow Jones Industrial Average and broader risky assets should have sunk the risk-sensitive euro against the US dollar, but late-week news that the European Central Bank could start buying Italian and Spanish bonds left the EUR/USD roughly unchanged.

What happens next is frankly anyone’s guess, and how financial markets respond is quite clearly another guess.

It was a tough week for the world's foremost currency as it finished sharply lower against key counterparts on sovereign credit rating fears and lackluster interest rate prospects.

The euro was far and away the worst-performing currency on the week, rocked by a Portuguese credit rating downgrade and a noteworthy deterioration in euro zone bond spreads.

The US dollar tumbled as the Dow Jones Industrial Average saw its biggest single-week rally in two years, limping into the first week of second half trading.