Overall, the dollar continued to strengthen overnight. The majors moved steadily lower, as the market did not have any volatile moves. The market now waits for the U.S. open, which may bring some new momentum into the market.

The Euro (Eur/Usd) dropped 100 pips today, after the pair failed to break above the 1.33 area, forming two consecutive bearish doji-stars. Near the 1.33 resistance area, the 20 and the 50-day simple moving averages have converged. Next week, the ECB is expected to keep the interest rate at the current 2%, but cut again in March.

Consumer confidence in the Euro-area fell to -31, the lowest read since the index first started. The very poor read points to a very clear contraction in the Euro-area. The Euro zone M3 number hit the wires at 7.3% much lower than what analysts had previously estimated. The number for the month of November was revised to 7.7%. The number of unemployed persons looking for a job in Germany for the month of January rose by 56K, much stronger than what analysts had expected

The Pound (Gbp/Usd) fell almost 180 pips since the Asian session started. The pair declines for the first time in the last three days, extending the downward move started in the U.S. session. The latest fundamental data coming out of U.K. suggests a slight improvement in the economy, but things still look dreadful.

The Aussie (Aud/Usd) bounced off the 50-day simple moving average in the Asian session, and started to head lower. The pair fell nearly 120 pips in the overnight session, moving in a downtrend channel. The pair has struggled to break above the 50-day simple moving average for eight days.

The Cad (Usd/Cad) rose steadily overnight, gaining nearly 120 pips. The pair trades just below the 20-day simple moving average, after it broke below it yesterday during the U.S. session. Tomorrow, the Canadian GDP is expected to show the economy contracted 0.5% in the last month.

The Swissy (Usd/Chf) is again trading above the 1.1500 support level. The pair moved very little in the overnight session, struggling to break above the high of the previous day of trading, but failed until now. The Swiss calendar was relatively clear this week, giving room to follow the euro very closely.

The Yen (Usd/Yen) is trading near the neutral pivot point (90.00), despite moving lower earlier. The pair also tested, in the early Asian session, the 20-day simple moving average, but failed to move anywhere higher. The 20-day moving average has acted as resistance for almost 3 weeks.

Retail sales in Japan have slumped for a fourth straight month in December. This is further proof that the economy has fallen into a recession. Retail sales have decline 2.7 percent and was the worst one month fall seen in the past three years, as well as being well below expectations of a 1.6 percent drop. Large retailers took the biggest hit, seeing a year over year decline of 6.3 percent.

European Markets And U.S. Futures Back Into The Red Territory

Current Futures: Dow -74.00, S&P -9.10, NASDAQ -10.50

European Trade: European market and U.S. futures moved lower in the overnight session. However, Asian markets managed to hold above the break line, after President Obama's plan cleared the first hurdle.

A report showed this morning that U.K. house prices have hit a four year low, shedding over 16% in the last year alone, the most since 1991. However, in the last few months the downside action started to subside as the Bank of England eased the monetary stance and the U.K. government pledged to increase the number of mortgages throughout its subsidiaries, such as HBOS and RBS.

On the other side of the pond, the Fed warns the financial markets about a long lasting period of deflation. In addition, the Fed has said for the first time that the world economy has weakened significantly. This is just another confirmation that the Fed is going to keep the rates as low as possible, <0.25%, for a long period. Some suggest, the Fed might not move the interest rate any higher until well beyond 2010. By these measures, the Fed hopes to add liquidity to the economy, thus the business cycle could again start to move higher.

In Europe, the U.K. Ftse shed 33.89 points (0.79%) to 4,261.31, while the German Dax lost 45.06 points (1.00%) to 4,473.66

Crude oil traded virtually flat in the last session. Crude oil for February delivery rose $0.30 to $42.10.

Gold moved lower, following the dollar's strength. Bullion for immediate delivery fell $14.90 to $884.60.

Previous Asian trade: Tonight, the Nikkei rose 45.22 points (0.56%) to 8,106.29. The Australian S&P/Asx gained 51.50 points (1.50%) to 3,495.50. After the Nikkei trading closed, Sony announced its earnings dropped 95% in Q4.