Euro covers mildly today after ECB Trichet extended emergency collateral rules in places into 2011. During the financial crisis ECB lowered the threshold of accepting debt from A- to investment grade level (BBB-). In parallel, ECB will introduce, as of Jan 2011, a graded haircut schedule, which will continue to adequately protect the Eurosystem. The move is seen as a gesture to show support to Greece to other members of EU. Euro regains some ground against dollar but the recovery is so far weak. The final resolutions for Greece remains in doubt. German Chancellor Merkel indicate that she's ready to cut a deal on supporting Greece, but the aid must be awarded as a combination from the IMF and collective bilateral aid in the euro zone.

Dollar is steady after release of jobless claims which dropped to 442k. Commodities recover with crude oil back above 81 level while gold also recovers from 1085. Fed Chairman Bernanke is scheduled to testify before the House Financial Services Committee today in Washington on the strategy for withdrawing stimulus and will receive much focus from the markets.

Elsewhere Sterling recovers mildly today on the back of stronger than expected retail sales data which showed 2.1% mom growth in February. Eurozone M3 money supply dropped more than expected by -0.4% yoy in February. German Gfk consumer confidence was unchanged at 3.2% in April. Japan corporate service price index dropped more than expected by -1.3% yoy in February.

Australia dollar get a lift earlier today by hawkish comments from RBA Assistant Governor Lowe. Lowe said that rates are set to continue rising toward more normal levels as he predicted a terms of trade boom.He also expects Australian dollar to be higher than the average of the past decade. The semi annual financial stability review also said that Australian households and businesses are well placed to pay for higher interest rates.

One thing to note is that Euro remains generally weak against commodity currencies. EUR/AUD made fresh record low of 1.4599 earlier today before recovering mildly. EUR/CAD dropped further to 1.3589 so far today and is still set to fall further to 1.3285 key support (2007 low).

/

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 90.96; (P) 91.68; (R1) 93.02; More.

Intraday bias in USD/JPY remains on the upside with 91.69 minor support intact. Further rise should be seen to 100% projection of 88.13 to 91.08 from 89.83 at 92.78 next. As discussed before, the break of 92.14 resistance confirms that correction from 93.74 has completed with three waves down to 88.13 already. Hence, retest of 93.74 high should be seen after taking out 92.78 fibo level. On the downside, below 91.69 will indicate that an intraday top is in place and bring consolidations. But downside should be contained well above 89.83 support and bring rally resumption.

In the bigger picture, rise from 88.13 should be resuming whole medium term rally from 84.81 after correction from 93.74 is completed with three waves down to 88.13. Break of 93.74 resistance will also affirm the bullish case that USD/JPY has bottomed out in medium term at 84.81 and should bring even stronger rise to 100% projection of 84.81 to 93.74 from 88.13 at 97.06 next. On the downside, break of 89.83 support is needed to indicate that rise from 88.13 is completed. Otherwise, the bullish outlook will remain in favor.

USD/JPY