The major currencies relinquished earlier gains versus the greenback in the New York session as safe haven flows propped up the dollar. The euro slid from 1.3328 to 1.3120 following dismal economic data from the US. The Conference Board's survey of consumer confidence plunged to its lowest level on record in January, dropping to 37.7 and missing estimates for an improvement to 39 from a revised 38.6 a month earlier. The Case-Shiller home price index also deteriorated, with the monthly figure in November down by 2.2% and the annualized reading declining by 18.2%. Meanwhile, the January Richmond Fed survey improved, with the composite manufacturing index rising to -49 versus -55 a month earlier and the services revenue index improving to -19 from -30 in December.

The FOMC kicked off its two-day monetary policy meeting today and is scheduled to announce the results on Wednesday at 2:15pm. With interest rates hovering near zero, markets will focus more closely on the accompanying statement for the Fed's assessment on the economy and projections for growth and inflation. Another issue to be closely scrutinized will be whether Fed Chairman Bernanke addressed the topic of inflation targeting. The minutes from the previous meeting hinted at that possibility, when it suggested providing greater clarity on the Fed's goals for inflation.

Euro Eases

The euro bounced higher initially in the London session, edging up to 1.3328 before sliding back toward 1.3120. Economic data from the Eurozone was better than expected. Germany's IFO sentiment survey improved to 83.0, beating estimates for a decline to 81.4 from 82.6. The current conditions index fell to 86.8, but less than the forecasted decline to 85.0 from 88.8, while the expectations component improved to 79.4 from 76.8. The Eurozone November current account deficit expanded 16.0 billion euros from a month earlier at 6.4 billion euros.

EURUSD will encounter interim resistance at 1.32, followed by 13230 and 1.3260. Subsequent ceilings are seen at 1.33, followed by 1.3330 and 1.3370. On the downside, support begins at 1.3150, backed by 1.3120 and 1.31. Subsequent floors are eyed at 1.3050, followed by 1.30 and 1.2965.