Published by Jamie JemmesonDollar spot prices held on to broad gains as the European foreign exchange market opened this morning (February 1st) as Federal Reserve of St Louis president James Bullard declared that deflationary risks have abated.In an interview with the Financial Times, the executive said the US had avoided witnessing a sustained downward turn akin to that experienced in Japan since the turn of the millennium.Deflation was also a key contributing factor to the economic cachexia experienced by Japan in the 1990s during its 'lost decade'.Speaking to the paper, Mr Bullard said that with deflationary risks subsiding, the Federal Open Markets Committee will now work more specifically to prevent asset bubbles from forming and move away from the current focus on unemployment.As the European forex market opened, the dollar was trading at a six-month high against its major counterparts, while the euro was languishing at a seven-month low.For more information on international payments, visit our Smart FX site