The dollar failed yesterday to withhold its gains and returned to decline as gauged by the dollar index. Today, the opposite prevails as the dollar index reversed from losses to gains and compensating for yesterday's losses. So the question is, will the dollar retain the strength o return south?

The French fundamentals today were positive and reflected the rise in spending by more than expectations with 0.9% rise in February. Italian confidence continues to tick higher to 103.8. Yet the focus remains on Germany's CPI amid the flow of hawkish comments from the ECB confirming the eminent rake increase in April meeting next Thursday.

Still fear dominates the euro's outlook amid the lingering debt woes and fears that ECB tightening will hinder an already fragile recovery and uncertain global economic outlook. The euro attempting to extend its gains versus greenback to then settled for the highs of 1.4148 and returned to soften versus the dollar to drag the pair south towards 1.4051.

The pair is high volatile and fluctuations prevail as the euro struggles to retain the losses. The euro needs to stabilize above 1.4080 and then return above 1.4135 to confirm the positivity; while failure to do so might take the pair to test critical support areas around the psychological levels of 1.4000-05.

Sterling declined versus the dollar for the fifth consecutive session from the highs of 1.6041 to touch the lows of 1.5941. The confirmed contraction in UK in the past quarter remained a big question mark over the prospects for recovery amid austerity measures and elevated inflation. Shall the pair breach 1.5995 it might extend the decline in a new attempt to stabilize below 1.5955 which if breach will drive the pair to the next support at 1.5870.

For the Japanese yen, its depreciation versus the dollar in ongoing, and surely not of agony to the BoJ! The USDJPY rebounded from 81.52 areas to reach the highs of 82.33 and currently hovering around its intraday highs.

Trading prevails among 81.80 support and 82.55 resistance which if breach will extend the upside move towards 83.25. Stochastic is overbought and might trigger the reversal to the downside if trading returned below 81.80.