The dollar yesterday had an unusual active day despite the holiday under Martin Luther King Day, retreating against the yen but appreciating against other major currencies on mounting risk aversion and unwinding of carry trades.

Elsewhere, sterling continues to drop against the dollar as risk aversion encouraged investors to sell the high yielding currency in favor of safer assets. Weak UK housing data also played a role behind the pressured pound pushing the pair to the downside to fetch a low of 1.9338 after recording a high of 1.9441

The dollar extended its gains the euro as investors worry that the slowing US economy may also hurt the growth in the European. The single currency of the euro zone is still trading low against the greenback pushing the pair to the downside to record a low of 1.4390 after recording a high of 1.4455.

The US dollar started off today's session with a gradual incline and rebounded against the yen on speculation the Bank of Japan would lower interest rates in the near future to keep the economy from slipping into a recession.

However, not long after that, the BOJ unanimously voted to keep rates unchanged at 0.5% the lowest among developed countries pushing the pair to downside to record a low of 105.63 after recording a high of 106.50.

For the rest of the week, investors will be looking for clarity in the market and the impact of somewhat the stimulus of the US economy. Accordingly, the meetings of the rate-setting by the Feds due at the end of the month will be scrutinize carefully.