Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe's debt turmoil, buttressing the dollar's status as the world's reserve currency.

Forty-seven non-U.S. banks held balances of more than $1 billion at the New York Fed as of Sept. 30, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP Plc, the world's largest inter-dealer broker. The dollar has appreciated 7.2 percent since Standard & Poor's cut the nation's AAA credit rating Aug. 5, the second-best performance after the yen among developed-nation peers, according to Bloomberg Correlation-Weighted Currency Indexes.

A budget deficit of more than $1 trillion, a deadlock among Congressional supercommittee members on spending cuts and 9 percent unemployment haven't deterred investors from seeking safety in the world's biggest economy. The euro has been undermined by the region's sovereign debt crisis, while the Swiss franc and yen have fallen as their governments buy billions of dollars to weaken them.

"There's not anything close to a substitute and part of it is the deepness of the market, the liquidity," Jack McIntyre, a fund manager who oversees $23 billion in debt at Brandywine Global Investment Management, a unit of Legg Mason Inc., said Nov. 15 in a telephone interview from Philadelphia. "There's a perception, right or wrong, that we're going to make good on all of our assets."

David Fuller's view Overall, the US dollar remains a suspect currency due to the USA's increasing deficit, slow economic growth, interest rates near zero and most of all, the increasing supply of greenbacks created by the US Federal Reserve.

Nevertheless, when global investors take fright, the dollar regains its appeal and is traditionally regarded as a highly liquid 'safe haven'. Unquestionably, there is no more liquid currency than the US dollar and safety is a relative concept in the eye of the beholder.

Currently, investors are understandably alarmed by Europe's sovereign debt and banking crisis which has much of the region in recession. Fiscal union is not created overnight, although for 'needs must' reasons it is probably occurring faster than most people expected, considering that it was not even on the official agenda until a few months ago.

Europe's problems remain, arguably, a greater concern than the USA's budget deficit and Congressional 'Supercommittee' stalemate. Additionally, there have been a sufficient number of bearish stories from China and India in recent months for investors to pull some capital out of the region, in temporary preference for US dollar assets.

How does this look technically?

EUR/USD (weekly & daily) remains rangebound overall but with a clear downward bias. Consequently a move above $1.39 is required to offset current scope for additional sideways to lower trading.

GBP/USD (weekly & daily) is also rangebound overall but with a downward bias at present. An upward dynamic is required to reaffirm support from the Dec 2010 to Jan 2011 and Sep-Oct lows evident in the $1.54 region.

USD/SGD (weekly & daily) broke a long downtrend in dramatic style in September. It retraced nearly two-thirds of that move in October but is rallying steadily towards the early-October high near S$1.32. It is beginning to appear overstretched once again but a downward dynamic is required to check current upside momentum as the year's high is approached.

Asian Dollar Index (weekly & daily) saw its biggest decline in two and a half years during September. It then regained over half of that move in October before encountering resistance from the 200-day MA. The current, persistent fall is beginning to appear overextended as it approaches the September low near 114 but an upward dynamic will be required to indicate more than temporary support near that level.