The dollar was mixed again in N.Y. on Wednesday, though major dollar pairings remained inside of fairly narrow trading bands. EUR activity slowed ahead of Thursday's ECB meeting, while USD-JPY remained on a heavier footing, though well supported into the 93.00 level. There was nothing to speak of on the U.S. economic calendar, and for Thursday, just weekly jobless claims and Q4 productivity are on deck. Given the recent volatility seen during ECB press conferences, decent price action may be in the cards tomorrow. Until then, we look for more sideways/rangebound action overnight.

[EUR, USD]
EUR-USD posted a brief spike early on from 1.3505 over 1.3530 after German government spokesman said the EUR is not overvalued at the moment if, you look at the long-term trend. However, Reuters reported that French Finance Minister Moscovici will raise the issue of the strong euro with eurozone counterparts on Monday. After the N.Y. open, EUR came under fresh selling pressure on Italian politics amid news that Berlusconi has closed to gap in the polls. If Berlusconi won the election it would be a negative for the reform process and raises contagion risk. The pairing slipped back to 1.3493 lows later, though there were good buyers under the figure, taking the euro back over 1.3530.

[USD, JPY]
USD-JPY headed to 93.30 lows, which were its weakest levels since yesterday's N.Y. close. Weak longs were stopped out under 93.50, but it was EUR-JPY's fall from 126.85 to 125.95, which was the catalyst for softer levels. Japanese bids are layered from 93.30 to 93.00 in the dollar pairing and should keep the downside underpinned. EUR-JPY may be vulnerable as the EUR is struggling on political uncertainty with Berlusconi closing the gap in the latest Italian election polls. Spain has also been in the spotlight today after Fitch warned that it remains a risk and EU's Barroso also warned that the eurozone crisis was far from being over during the European morning.

[GBP, USD]
Cable marked time close to 1.5650. The downside was supported at 1.5630 from the trendline drawn off lows from January 2009. Chartists claim a Cable close below here could be good for a few hundred pips on the downside. Further losses could dovetail Carney's testimony tomorrow, though Cable shorts are beginning to get overstretched. The market will want clarification on Carney's dovish sounding remarks at Davos. More specifically, he may be quizzed on a nominal GDP target, more extended policy guidance and the potential for flexible inflation targeting. We think Carney may weigh remarks, partly due to a smooth transition for the current MPC and also because King is still in charge. However, Carney should leave policy options open ahead of July 1st.

[USD, CHF]
CHF selling pressure influenced after the European open. USD-CHF was boosted from the 0.9080 area above 0.9140 after good hedge fund demand emerged ahead of 0.9050 in Asia. EUR-CHF also met good support ahead of 1.2300 to trade over 1.2350 on the flows. The recent pick up in the CHF was exacerbated due to seasonal influences and now these have dropped off selling pressure on upticks has had more of an impact. During Tuesday's session SNB's Zurbruegg ruled out negative rates, which caused brief swissy demand. However, the improvement in the eurozone has resulted in a drop off in speculative inflows, along with the introduction of charges for CHF deposits by large Swiss banks over the last several months.

[USD, CAD]
USD-CAD moved up to 0.9985, intra day highs, in early North America. The move came as oil prices and equities headed lower. Range trade persisted however, with offers still seen in place at 1.0000. Stops remained over 1.0010 though were left untouched, while on the downside, buyers were lined up at 0.9950. USD-CAD has been testing the 0.9950 level, which has been the bottom of the range this week. Standing bids have been reported at the level all week as well, while stops should be a factor under 0.9940. The pairing managed 0.9952 lows in afternoon dealings, before bouncing over 0.9970 on short covering.