OVERVIEW - Equities continue to hold onto gains into the mid-day with the DJIA, S&P and Nasdaq up some 1.5%, 2.5% and 3% respectively. Commodity price action has been less than impressive with oil showing flat on the day and gold tracking some 1.3% lower. The markets have been aided by positive comments out from President Obama who has expressed confidence that his stimulus package will pass Congress. ECB President Trichet has also been on the wires saying that he sees no risk to deflation despite the current market environment. Of note, Euro gains have stalled out just shy of Tuesday's 1.3330 highs. The major will need to break back above 1.3330 in the short-term to keep the recovery prospects alive. The markets are starting to quiet ahead of this afternoon's much anticipated FOMC due at 19:15 GMT.

Eur/Gbp is in the process of rolling over after stalling out by the 61.8% retracement of the 0.9805-0.8835 move. Setbacks have now slightly exceeded the 10-Day SMA 0.9240 and a deeper drop is projected with no real support until 0.9130 (14Jan previous high). A break below the latter will open a full retracement back to key range lows at 0.8835 (9Jan low). Only back above 0.9520 (26Jan high) negates bearish outlook.

Eur/Chf has finally broken above key neckline resistance at 1.5145 today to confirm an inverse head & shoulders basing pattern. The market had been building a base below the latter since December 2008 and the upside break projects a more significant move over the medium-term back towards the 1.5600 area which coincides with the 78.6% fib retracement off of the 1.5885-1.4650 move. Inability for the cross to extend setbacks after basing out by 1.4650 in mid-January also reaffirms newly adopted bullish outlook with the price stalling just ahead of the October historic lows at 1.4300. Daily studies are starting to look a little stretched so we would be more inclined to look to buy into dips.

Eur/Cad has been locked in a choppy consolidation following the sharp drop off of the 1.7500 multi-year highs posted back in December 2008. Price action leaves us with a moderately bearish bias but would recommend remaining on the sidelines until a break below 1.5765 (6Jan low) or back above 1.6645 (16Jan high).

Eur/Jpy has had a difficult time trying to establish below the 115.00 level with the cross bouncing out from the latter for the fourth time in as many months. While the broader structure remains grossly bearish short-term indicators are pointing higher and the market looks content to play the well defined range. Look for a push back towards 125.00 (Ichimoku cloud) over the coming days. The daily Ichimoku cloud has been capping the price since August 2008 and ultimately only back above would alleviate downside pressures.

Cad/Jpy Inter-day price action is now showing that the price is looking to carve out yet another base in familiar territory after failing below 70.00 to 68.45 last week. The cross has been extremely well propped on dips to the 70.00 area (24/27/28Oct & 5/12/19Dec & 15/21/22/23Jan) and with daily studies starting to turn back up, scope exists for a more material corrective bounce back towards the range highs at 80.45 over the coming days. Both slightly shorter term and longer-term analytics confirm with the hourly chart now taking the form of an inverse head & shoulders-like structure while the weekly looks to be putting in a bullish reversal after taking out the previous weekly high.