Overall: After the dollar moved mostly higher in overnight sessions, the majors traded mostly within a range on Tuesday as Wall Street declined slightly after Monday's huge move to the upside. There was little U.S. economic news other than a government report which showed home prices rose 1.7% in January, although most economists viewed the report as a one-off that was unlikely to be repeated. Meanwhile, in London this morning there was a reminder that fundamentals still count; sterling received an unexpected boost when UK CPI inflation data came in stronger than expected, forcing BoE Governor King to write another letter to the Chancellor to explain why CPI is more than 1% above target.

The Euro (Eur/Usd) established a resistance level in the 1.3670 area during Asia and began to depreciate about an hour before DAX futures opened, sending the pair to 1.3477 just before Wall Street opened as S&P futures declined about 8 points. Intermediate resistance levels were seen at 1.3620 and then 1.3560 during the decline. Once in N.Y., the pair range traded although it fell to test 1.3500 as support.

The European PMI service shows that both the service and manufacturing side of the economy are still in a contraction phase. This is the tenth consecutive month when the two indexes have shown a read below the 50.0 level, which separates contraction from growth. The German service PMI was released at 41.7, showing the industry has contracted during the last sixth months, while the manufacturing index came at 32.4, slightly better than expected.

The Euro-area current account was released at -12.7B, much worse than analysts’ expectations. The previously released number, for the month of December, was revised lower, to -7.6B. The report shows that the Euro-area trade account still recorded a deficit in December, as exports dropped sharply

The Pound (Gbp/Usd) also set a resistance area during Asia, seen at 1.4690. From there, the pound traded in a much more erratic fashion than the single currency, reaching a high on 1.4777 as London got busy and a low soon after at 1.4641 on the back of the higher-than-expected inflation numbers. The pound failed at the London high during N.Y. trading but still looked to finish the N.Y. session with a slight gain.

The U.K. Consumer Price Index moved higher in February, to 3.2%, from 3.0% one month earlier. Even though the CPI declined at a record pace last month, this month the inflation gauge rose. In addition, the Core CPI, which excludes volatile items, rose to 1.6% from 1.3% last month. To some extent, the CPI number does not justify the BoE’s concern of “undershooting” the inflation target.

The number of mortgages approved by the BBA rose by 28.2K, higher than analysts’ expectations. The previously released number, for the month of January, was revised higher, to 24.3K. In February, net mortgage lending rose by £3.9 billion, above the average of the previous six months.

The Aussie (Aud/Usd) reached .7092 just before Tokyo went to lunch and declined thereafter, establishing intermediate resistance in the .7075 area before declining all the way to .6962 about 90 minutes before Wall Street got going. Once in N.Y., the pair basically range-traded although it did look to finish the N.Y. session with a gain.

The Cad (Usd/Cad) traded within a 50-pip range during the overnight session. The pair struggled both in the Asian and European trading hours to break below the 1.2200 level, but failed. Around the same area, the cad bottomed in the last day of trading. The pair was very range-bound in N.Y. as oil was little changed on the day as it gave off bullish and bearish price-action signals on the 30 minute chart although it looked set to finish the day with an upside move.

The Swissy (Usd/Chf) again showed volatility overnight, but the pair was unable to establish solid direction in the overnight market. Yesterday, the swissy failed to break below the 200-day simple moving average, and formed a large doji-star. As with most other pairs, the swissy was very range-bound in N.Y. although it looked set to finish the day's trading with a gain.

The Yen (Usd/Yen) advanced sharply in the Asian session, but struggled to move higher after the London open. The pair gained 130 pips during the Asian session, reaching TheLFB R2 (98.35), but failed to move from there on. In the last three days, the yen has gained 370 pips but the pair looked to book a small loss in N.Y. has stocks slightly declined on the day.