The dollar eased versus most major currencies in N.Y. trade on Tuesday, though stayed firm against the yen. USD-JPY in fact, posted new trend highs near 93.50. EUR-USD buying in London set the stage for further euro gains. A large EUR-USD bid ahead of 1.3450 out of Asia and a massive EUR-JPY buy order, fueled a rally out of 124.00 over 126.00 as specs added momentum to the move. The euro moved to near 1.3600 versus the dollar after reports said the ECB won't unwind its exceptionally accommodative monetary policy stance any time soon, according to unnamed "sources." The majority at the ECB do not see a problem with the firmer EUR, saying it's a function of increased confidence in the eurozone. Elsewhere, the dollar bloc firmed up with stronger equities and commodity prices, though the beleaguered pound drifted lower through the session, with cable basing at 1.5630. Wednesday's U.S. calendar is bare but for weekly EIA petroleum inventory data.

[EUR, USD]
After finding support ahead of 1.3500 in early trade, EUR-USD rallied over 1.3590 from 1.3535 on reports the ECB won't unwind its exceptionally accommodative monetary policy stance any time soon, according to unnamed "sources." The majority at the ECB do not see a problem with the firmer EUR, saying it's a function of increased confidence in the eurozone. They see little risk to the recovery from FX and don't thing the currency is strong enough to prompt a change in monetary policy. The ECB meets Thursday and most anticipate an unchanged policy stance.

[USD, JPY]
USD-JPY continued to hold the 93 handle, where buyers were said to be lining up. Japanese exporter offers are seen from 93.50 now, and could slow gains for the near term. EUR-JPY buying helped support the dollar pairing as well, and some look for further cross gains should the 127.00 level give way to the upside. EUR-JPY experienced profit taking after the steep rally during the European morning. After trading around 126.70 after the N.Y. open it pulled back to 125.85 on Japanese selling. From there though, as EUR-USD moved higher, so did the cross, which peaked over 126.90.

[GBP, USD]
Cable traded briefly traded under 1.5700 early on, close to where moderate size option strikes rolled off at 10:00 EST. There were no specific reasons for the extended Cable losses, but selling pressure gained momentum once support gave way at 1.5725-30. Given the proximity of today's expiry it's likely that delta hedging picked up. EUR-GBP was stable around 0.8600 after it was boosted by a macro fund buy order and general EUR strength during the European morning from 0.8555. The cross touched 0.8690 later on the back of EUR-USD gains. Cable meanwhile, took out barriers under 1.5700, and traded to 1.5690 lows. GBP struggled to overcome it's entrenched weakness despite a very impressive rebound in U.K. Services PMI today. GBP shorts have increased ahead of Thursday's testimony from incoming BoE governor Carney, who most expect will make dovish sounding remarks.

[USD, CHF]
USD-CHF was supported from 0.9075 on long position building by hedge funds, which saw it trade across the 0.9100 handle. The dollar pairing has seen good support since it failed to extinguish 0.9000 barriers last week. The move higher in the dollar pairing came in lockstep with EUR-CHF gains. The cross firmed up from 1.2275-80 as short term buyers forced a run up to 1.2340 on further EUR-USD demand. SNB board member Zurbruegg said that rates will have to rise rise once growth recovers, but it may take longer than some wish.

[USD, CAD]
USD-CAD ran into offers into the parity mark overnight, with buying coming on the back of soft risk taking levels. Following better PMI news from Germany though, risk taking improved, which saw USD-CAD ease toward 0.9970. USD-CAD is back to near the bottom of its intra day range, trading under 0.9975 after peaking near 0.9995. Bids reportedly came back in at the lows. As risk taking remained strong, the pairing touched 0.9966 lows in afternoon trade. Ranges remained narrow though, which could cause some complacency, though downside limits are seen at 0.9950 for now. The Canada January Ivey PMI came in near expectations, and had little market impact.