It was a quiet start to the week, but the dollar maintained a stable to firmer tone following Friday's strong rally. EUR-USD tested the 1.3000 level and Cable also threatened 1.5000, but both pairs found a modicum of support on dips, with light reserve management flows and option related support influencing in low volume trade. Data was weak out of the eurozone and the U.K. Eurozone sentiment tumbled and PPI decelerated, while U.K. construction PMI slumped, which kept alive BoE QE hopes ahead of Thursday's policy announcement. In Asia, incoming BoJ Governor Kuroda was dovish on the policy outlook, which weighed a touch on yen, but overall markets were underwhelmed.

[EUR, USD]
EUR-USD moved under 1.3000 after the European open as the underlying negative trend fueled early selling pressure. Movement was choppy around 1.3000 due to the influence of large option expiries. However, a move back into 1.3020 saw another round of sell-interest after weaker than expected eurozone sentiment data. Italian political uncertainty alsp fueled wider eurozone spreads today and is weighing on stocks. Bersani issued an ultimatum to Grillo to support a temporary government, while the press suggest that Italy President Napolitano is keen on a second technocrat government. EUR support around 1.2945-50 is a near-term focus intra-day and then 1.2900 thereafter. Sellers are tipped from the 1.3040-50 area and larger offers are seen from 1.3080.

[USD, JPY]
JPY is easier after incoming BoJ board members were dovish on the policy outlook. Kuroda indicated there would be more bond buying and longer-dated maturities were also likely, which kept USD-JPY supported on dips. PM Abe reiterated that revising BoJ law is an option, which would enable it to explore foreign bond buying, though Kuroda admitted that going down this route could be controversial in overnight comments. The USD-JPY may be more limited in the near-term, with flows related to the fiscal year-end going through with more frequency since late last week. Exporters are noted on top, though Japanese investors have continued to support both the dollar pairing and the crosses on dips. USD-JPY is currently supported around 93.50 after trading between 93.25 and 93.75 intra-day.

[GBP, USD]
Cable slumped to 1.5000 from 1.5055 after construction PMI came in at its lowest level since October 2009. However, it's likely that construction was also heavily impacted by bad weather. Nevertheless, it will keep alive expectations of BoE policy stimulus into this week's BoE monetary policy outcome. Cable bias is on near-term support between 1.4965 and 1.4950, but it has met good buyers into 1.5000 since it broke down on Friday. An active Asian sovereign has been tipped and long-term corporate hedging picked up over the course of the last week or so.

[USD, CHF]
EUR-CHF traded on an easier footing. It pulled back from 1.2275 to trade just under 1.2250. EUR-USD's move back into 1.3000 added some weight, but it should maintain steady to firmer levels as the dollar pairing dominates. Dip buying was noted into 0.9410-20 in Asia and the near-term bias should remain with the topside after Friday's stop hunt trigered a move up from 0.9360 to 0.9463 highs. Movement back over 0.9450 is expected to meet supply related to outstanding option barriers from 0.9500.

[USD, CAD]
USD-CAD bias is still with the topside, with good demand from short term accounts and position traders following the pullback from 1.0340 to 1.0265 on Friday. The in-line Canadian GDP outcome was the catalyst for profit taking into the weekend, but another test of recent highs around 1.0340 looks likely with appetite for risk a struggle as the week gets underway. Offers on the topside are noted up to 1.0340, where an options presence is also tipped ahead of 1.0350 barriers.