JPY movement set the early tone. After it extended to new trend lows in Asia profit taking has set in. USD-JPY traded over 94.00 and EUR-JPY reached 127.70 after BoJ Governor Shirakawa announced he will step down early on March-19, which fueled expectations that Japanese policy stimulus will accelerate. The EUR leg saw prominent Japanese sales from 127.70 to 127.00-10 ahead of the Asian close and early European accounts sold from 127.40-50 towards 126.75, which weighed on EUR-USD. After topping out just ahead of 1.3600 it headed back to 1.3530. AUD looks weak early after a soft retail sales reading forced a break below the bottom end of the recent range, leaving the focus on the 200-dma at 1.0310. GBP is also heavy amid short position building ahead of Thursday's testimony from incoming BoE Governor Carney to the Treasury Select Committee

[EUR, USD]
EUR-USD probed the 1.3600 area as EUR-JPY strength fueled an early move out of 1.3570. The EUR got added support on Tuesday after a MNI news source said ECB won't unwind its exceptionally accommodative monetary policy stance any time soon. It claimed 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. EUR buyers ran into good offers into 1.3600 from short term funds, while EUR-JPY profit taking also weighed ahead of the European open.

[USD, JPY]
USD-JPY and the JPY crosses surged as equity markets recovered on Tuesday and added strong gains in the Asian session. A 4% surge in the Nikkei 225 was the leading influence amid Japanese policy hopes after BoJ Governor Shirakawa announced yesterday that he will step down three weeks early when his two deputies will leave office on March-19. USD-JPY took off from just under 93.50 in early Asia. Specs forced the issue into 94.00 and extinguished long term barriers, which dragged EUR-JPY up to 127.70 highs. There was very good Japanese exporter hedging in USD-JPY over 94.00, while EUR-JPY also ran into a very large offer, which fueled a brief move into 127.00-10 by the Tokyo close.

[GBP, USD]
GBP is trading heavily after it broke down on Tuesday to reach 1.5630 trend lows. GBP short positioning has accelerated amid expectations that fundamentals will remain weak and incoming BoE Governor Carney will make dovish sounding remarks on Thursday when he addresses the Treasury Select Committee. Cable eyes support at 1.5625 ahead of 1.5600 option barriers, while EUR-GBP is positioned for a move back on the 0.8700 handle.

[USD, CHF]
The CHF has been weighed on since the Asian afternoon by hedge fund sales. EUR-CHF ran into good support at 1.2300, which came in tandem with a USD-CHF bid ahead of 0.9050. The dollar pairing is trading ahead of important levels. Long term support is noted around 0.9000, where long standing option barrier exposure is noted. It looks likely that USD-CHF will continue to meet buying interest on dips and this was a factor in the early Europe run up to 0.9130.

[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.