Overall, the dollar strengthened again in the overnight session against the majors, except for the yen. Currently, All of the major currency pairs have traded in the same direction they did on Monday, but on limited momentum. There were no important releases during the European session, but the U.S. session starts with trade balance figures from the U.S. and Canada.

The Euro (Eur/Usd) managed to break below the 1.33 level for the first time in a month during the overnight session. The pair lost nearly 100 pips tonight, as the ECB is now expected to cut interest rates on Thursday. Most market analysts assess that the ECB is behind the curve, saying that the bank would have to cut rates at a strong pace later in the year. As a result, this is eroding the confidence in the single currency.

The Pound (Gbp/Usd) fell 550 pips in the last three days, shedding every pip gained last week. The pair is trading below all the important daily moving averages, as it seems the U.K. economy will first get worse before it gets better. Some analysts say, the pound may make a new low in the following few days, as the BoE is seen cutting interest rates down to 0%.

Retail sales in the United Kingdom fell 3.3 percent on a like for like basis and dropped 1.4 percent on a total basis from December of 2007. This has been the worst December figures seen since the survey was started 14 years ago. In the United Kingdom, house prices again took a fall according to the Royal Institute of Chartered Surveyors. The report has shown that 73.0 percent of surveyors reported a decline rather than a rise in house price in December.

The U.K. deficit widened again in November to a record £8.3 billion, more than market expected. The previous number was revised lower, from a deficit of £7.8 billion to £7.6 billion. U.K. house prices fell by 8.6% from November 2007. The release was slightly lower than what analysts had predicted. The average price of a home stood at £199,732 in November 2008

The Aussie (Aud/Usd) is also trading lower, for the fifth consecutive day. The pair has fallen nearly 90 pips overnight, and is now holding just above the 50-day simple moving average. The pair has been sold lately, following the decline in the commodity markets. Raw materials are Australia's main export industry, and have the power to influence the whole business cycle.

The Cad (Usd/Cad) continued to advance in the Asian and European sessions, as oil is heading towards the low of the year. The pair gained 50 pips, testing, at the same time the 50-day simple moving average and the 1.2250 resistance area. The pair will need strong momentum to break significantly above this area.

The Swissy (Usd/Chf) advanced to TheLFB R1 (1.1225), but has retraced a small part of the move. This area has acted as resistance for the last few days, especially on Monday, when the pair topped here. Tonight, the pair moved in-line with the euro.

The Yen (Usd/Yen) is heading for its fifth day of declines, in which the pair has fallen nearly 450 pips. The yen lost 40 pips tonight and is now testing the 89.00 area, where the pair bottomed one day earlier. The Japanese yen is strengthening lately despite the numerous BoJ intervention threats.

The M2 money stock for Japan has increased by 1.8 percent year over year in December. This figure is slightly higher than the 1.7 percent which was forecasted and is up from the November figure of 1.8 percent. Japan's current account for the month of November came in at 650 million yen which was slightly lower than Octobers 1.1 billion. This dramatic decline this year is mainly due to sluggish exports as consumers cut spending amid the financial crisis