Probably will have a short-lived run up but not for long. It will happen mainly due to a fear of intervention and demonstrations by European exporters in France and Germany.
For many years the USD was kept overvalued mainly to finance the European Union and thus indirectly contribute to its monetary integration and development. America was flooded by German cars and other European products. Now that the European union has its own currency, it's time to give some back and the slide of the USD accomplishes exactly that. American goods are much cheaper now for European consumers and despite the war and housing problems American exporters are making tons of money.
The USD slide will continue until Americans get back a fair share of what they gave to Europeans, not only during the EU integration but also after WWII for rebuilding Europe. This can mean EUR = 2 USD or whatever. It is silly to interpret that as a sign that USD is losing its dominant position. People who do not understand global economics make such grave mistakes.
At the same time, when foreigners panic and start selling American debt, they will lose all the interest they have earned and also sustain principal loss. This has happened before in the early 80's and it is a normal procedure where Americans buy back their debt for maybe 50 to 70 cents on the dollar. It's good business, believe me!
The subprime issue is inflated by the media on purpose. No money was destroyed, they went to the pockets of builders, material and equipment suppliers and real estate agents. The banks keep on feeding the media hysteria in order to push a relatively inexperienced Fed chairman to cut interest rates and help them push the reply button. The real problem is that when they packaged the CDOs they did not use conservative default rates but very optimistic figures to price them at huge premiums. Then, they inflated their assets to boost their stock price and executive bonuses. They fooled investors and now they should get punished.
Ron