USD undergoes broad based selling. FX market participants show resurgence in risk appetite despite unchanged equities. Pending home sales much better than expected. Dodd hearing slated for afternoon.

OVERVIEW - While equity prices have been relatively flat into the London fixing, the story has not been the same in the currency market with the USD selling off across the board. The much better than expected release of US pending home sales data coming in at +6.3% after analysts had been projecting a flat reading provided an additional boost to market sentiment, helping to accelerate the USD declines on a resurgence in risk appetite and demand for yield. One European central bank has been cited as a major buyer of the Euro against the USD and GBP today. Looking ahead to the afternoon, event risk comes in the form of US consumer confidence (previous -54) due out at 22:00GMT. Another potential market mover could be the developments out of the Dodd hearing on Modernizing the US Financial Regulatory System. Commodities are modestly higher.

Gbp/Jpy remains confined to a very well defined downtrend and could be looking to roll over yet again following Monday's bearish reversal day. The key levels to watch above and below come in by 130.90 and 125.40 with a break above or below required to establish a clear directional bias. It is worth noting that medium-term technical studies show the weekly RSI attempting to cross up from oversold. Historically, any time the RSI has shown a positive cross on the weekly chart, it has resulted in significant upside. However, we would need to see a break back above 130.90 to strengthen this case.

Aud/Cad has found some support on the most recent dip by 0.7725 which coincides with the 61.8% fib retracement off of the 0.7150-0.8690 major move. Monday's bullish close has opened fresh upside today with daily studies showing plenty of room to run. Next key topside resistance comes in by 0.8110 (29Jan high), which guards against the more significant 0.8225 (28Jan high). Look for setbacks to now be well supported by today's low at 0.7840. Daily stochastics confirm and are on the verge of a positive cross from oversold.

Nzd/Jpy has extended declines to fresh multi-year lows at 44.25 on Monday ahead of the latest minor bounce. Scope now exists for deeper setbacks over the medium-term with the price now expected to test the life-time lows from October 2000 at 41.80. However, daily studies are oversold and we can not rule out the possibility for a short-term reversal back towards 48.60 (28Jan high). Tuesday's break back above 45.85 ends a series of consecutive daily lower highs and could act as the catalyst for said correction. A bullish close will confirm short-term basing.

Aud/Chf has been locked in some choppy bearish consolidation since October 2008 with the price confined to a loose range between 0.7000 and 0.8000. While we did see a spike low to 0.6935 trend lows in late October 2008, dips have been more or less supported on multiple attempts ahead of 0.7000. Recent price action once again shows the potential for yet another base by 0.7280 following Monday's bullish reversal day off of rising trend-line support. Look for a move now back towards 0.7735 (28Jan high) over the coming days. Below 0.7280 negates.