The market is eagerly awaiting the January US CPI figures. In preparation, the dollar was down on most crosses yesterday and risk sentiment in general appears to have settled for somewhat less inflationary pressures. As I wrote in the last update, important levels in the individual currency pairs have ended the rally in the dollar for the time being. But it still looks to me like a consolidation phase that will be resolved with a stronger dollar. Bears do not want so see the dollar index (DXY) above the 104 treshold. Below 102.60/50 dollar bulls should get ready for a retest of the big 101/100 support zone.
EURUSD -- 1.0760
The 50 ema (1.0681) is the key support line for the euro. With a daily close below that moving average euro bulls need to start worrying. Next resistance can be found around 1.0787/00 and the mid Bollinger band (1.0821). Above the latter, it becomes more likely that the euro will move towards the big 1.1000/1.1200 resistance zone again.
USDJPY -- 132.02
This currency pair was the big exception yesterday. The dollar gained a total of 92 pips between opening and closing against the yen. The rally was only ended by the 50 ema (132.59), which should play a key role for today and the coming sessions. Above the upper Bollinger band (132.91), the bearish scenario is over for now. A possible first CPI-induced spike must and can of course be handled flexibly if you do not go flat into the event. I personally would like to sell dollars towards the 200 day line but that is still a long way off.
AUDUSD -- 0.6969
Risk sentiment is actually good, but the Aussie is unable to benefit. The 0.7000 big figure was the limit last week and it may need another leg up in the stock market for the currency pair to go higher. Next support comes in at 0.6891 (50 ema). Below that important moving average the lower Bollinger band (0.6846) and the pivot line (0.6829) may give some orientation.
Good luck,
Sebbo