The Euro was under pressure all day as traders were reluctant to hold on to long positions ahead of this week's central bank meeting. Much of the selling pressure was related to concerns over the Euro Zone economy and the upcoming actions by the European Central Bank later this week.

On May 7th the European Central Bank meets to decide the future direction of interest rates for the European Union. With the European Union just this past weekend issuing a forecast of a severe decline in the economy, there is no question that the ECB will slash rates to 1.0%.

The difficult part is figuring out if the ECB is going to implement an asset buyback program. Even if you guess right, you still have to get the amount and the duration of the plan correct. This uncertainty is leading to selling pressure on the Euro this morning.

The ECB may pull some tricks following the meeting very similar to what the Bank of Canada did several weeks ago when it decided to refrain from applying any quantitative easing to its economy. At this time EUR USD traders are pricing in a rate cut and quantitative easing. After the interest rate announcement the ECB may announce a plan to buy back assets but there is no one to force the ECB to apply it right away. Remember it has a consistent record of being behind the curve.

U.K. traders came back from holiday and were able to hold the British Pound higher. Investors are still looking for reasons to buy the Pound other than just a weaker U.S. Dollar. I don't know why the Pound would be appreciating other than speculation that the U.K. economy was going to rebound or that the activity was just spread adjustments because of the holiday.

Although the current trend is up, gains appear to be labored as investors are still looking for valid reasons to be long the Pound. Longer-term traders still don't believe that this market will be able to sustain recent gains given the current economic conditions in the U.K.. The major concerns are centering on the ongoing contraction in the economy and a widening budget deficit.

The Canadian Dollar took its cues from the equity markets today. A weak stock market kept downside pressure on the Canadian Dollar most of the day by giving long traders an excuse to take profits.

Commodity markets were also under pressure today. This scenario provided additional selling pressure on the Canadian Dollar. Weak copper and crude oil markets in particular fueled the selling pressure while a higher gold market limited some of the losses.

Trading was choppy all day in the Japanese Yen. Traders can't seem to make up their minds because of the two-sided trade in the stock market and optimistic testimony by Fed Chairman Bernanke. The lack of fresh economic news today is also giving the USD JPY a reason to trade in a tight range.

Unfortunately this type of trading could be the theme until Friday when the U.S. releases the results of the latest Non-Farm Payrolls Report. Pre-report estimates are for job losses for April to total close to 640,000. Any significant figure above this guess will be the catalyst to drive this market lower.

Technically the USD JPY is caught in a range between a pair of retracement numbers at 98.53 and 99.22. Don't be surprised if the market stays in this zone until Friday. If it doesn't, the best advice is to go the way of the move.

The stronger U.S. Dollar kept pressure on the Swiss Franc throughout the day. News that Swiss bank UBS posted a loss had little effect on this market because traders are now looking forward to better times instead of to the past.

Technically, the USD CHF is locked inside a retracement zone at 1.3350 to 1.1565. This is very similar to the formation in the USD JPY. This pair is likely to stay within this range until it is acted upon by an outside force like Friday's Unemployment report.

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