EURUSD

Recent Euro weakness has been the primary cause of dollar strength. The dollar has surged on a huge risk aversion wave stemming from fiscal difficulties in the euro zone, which has already emasculated the anticipated earnings season. The growing negative sentiment surrounding the euro has resulted in huge futures short positions against it. With the resolution in the wings, the euro is looking more and more vulnerable. Yesterday, the markets completely shrugged off positive EZ economic news about service sector expansion and concentrated on negative retail sales during April and continued sovereign debt fears. During active market sessions, the Eurodollar has now slipped over 200 pips yesterday to $1.2790, a one-year low. The EURUSD found support at 1.2800 yesterday and is still hovering at that level currently. Be on top of today's EZ policy press conference, which could determine direction for the day.

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GBPUSD

UK elections today. The Conservatives will likely fail to secure an overall majority but may form a new government. The pound continued to weaken against the dollar yesterday to $1.5085, as did most currencies. Since January the pound has slipped over 7% against its major trading partners as fears surfaced that Britain's budget deficit is out of control. However, the real threat today is the possibility of a hung parliament in which no party captures overall power. However, it is likely that most of that political risk has already been somewhat priced into the pound's current value. Keep an eye on UK Services PMI today as well.

USDJPY

The yen has strengthened overnight as risk aversion sentiment has struck Asia as well. USDJPY retreated to an overnight low of 93.65 as Asian equities also corrected for a fourth day.