Movement settled into a narrow trading band for the most part after heavy volumes on Tuesday carried over to the Asian market. JPY selling pressure set the tone, which triggered a USD-JPY run up to new trend highs over 94.00. In Europe, consolidation set in, leaving it close to 93.70 throughout. EUR-JPY was a good mover and pulled back from 127.70 in late Asia towards 126.50 by early Europe. The Fitch downgrade of Netherland's was a euro negative, but the market is broadly balanced at current levels as eurozone uncertainty is offset by hopes for a sustained recovery. Ahead of tomorrow's ECB meeting appetite to take on positions was limited. Elsewhere, AUD-USD's breakdown was eye catching after weak retail sales fueled bearish bets. One macro name successfully took out the 200-dma around 1.0310. Meanwhile, GBP was heavy, but Cable found strong support at the 1.5630 trendline.

[EUR, USD]
EUR-USD steadied after it posted an early move to 1.3514 lows. The catalyst for the downturn was a combination of EUR-JPY profit taking and a stop hunt in USD-CHF over 0.9120-30. The Fitch downgrade of Netherland's AAA rating outlook was an early euro negative, but it has not had a deep impact on sentiment today. EUR-USD is looking more broadly balanced since it turned away from 1.3700 and threatened 1.3450-60 in early Europe on Tuesday. More sideways/rangebound action is likely in the near-term without any fresh catalysts. The uncertain political backdrop in Spain and Italy is being offset by recovery hopes. Thursday is likely to be a pivotal day for position takers, with the Spanish debt auction due ahead of the ECB meeting. Draghi was optimistic about the eurozone prospects last time round, but may weigh EUR remarks given the impulsive rally since late last year.

[USD, JPY]
USD-JPY consolidated overnight gains and traded close to 93.70 since the European open. After it reached 94.08 highs in late Asia it met a very good offer from a Japanese name, which triggered a bout of profit taking to the 93.65 region. Further losses are being contained by good support from a variety of interbank names, as well as Japanese order flow, which is layered into 93.30 and 93.00. Over 94.00 order congestion picks up amid long term corporate hedging ahead of key 95.00 barriers.

[GBP, USD]
Cable is trading heavily after it made a clean break lower after Tuesday's N.Y. options cut. GBP short position building has been evident for several sessions and more weakness is anticipated into Thursday's BoE meeting and testimony from incoming BoE Governor Carney. On an intra-day basis there is a big focus on the 1.5630 level, which is trendline support drawn off January 2009 lows. Sell stops are noted behind this level at 1.5625 and option barriers are noted at 1.5600. A close under this trendline would be a big negative for Cable and would reinforce expectations of much weaker levels.

[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 ran into offers into the parity mark on Tuesday as an improvement in risk appetite encouraged a supportive tone via the commodity bloc currencies. USD-CAD headed back towards the 0.9950 region, but it made no further downside progress due to prominent bids layered down to 0.9930 and then in front of 0.9900. It looks like more rangebound action will continue, though this could cause some complacency. Stops closest to current market levels remain on the topside behind 1.0000-10 offers.