The dollar has drifted towards the lower end of its recent ranges overnight as the demand for riskier appetite returns in direction-less trade after US trade numbers showed a bigger reduction in the deficit for February to -$37bn, much better than expected. This was caused by a reduction in imported oil and motor vehicles, while weekly jobless figures showed a small improvement on last month, down to 462k, slightly higher than expected. The market will now be looking for towards this afternoon's retail sales and Michigan confidence figures for continued evidence of recovery in the US. An increase of 0.3% is expected for February with a Michigan confidence figure of 74.

In Europe, Greece was again paralysed by strikes yesterday against the package of austerity measures due to be brought in by the government to deal with the fiscal deficit. Despite this the Euro has crept higher as confidence improves amongst investors in Greece's ability to pay its debt shoring up demand for riskier assets.

Sterling has also found some support after the release of a quarterly survey from the Bank of England, showing that expectations for inflation remain fairly muted, albeit to the upside slightly.

The Japanese yen has remained on the weak side on speculation that the Bank of Japan may look to stem the yen's rise by expanding its stimulus fund that provides loans to banks while finance minister suggested that intervention was also an option.

EURUSD - the Euro continues to trade in a broad range between the key downside support at 1.3485 on a daily close and the recent highs around 1.3710/20. The trend line resistance from the 1.5145 highs continues to weigh down on the market with the resistance now at 1.3770 which could be difficult to crack.

GBPUSD - The key levels on the cable remain at 1.4850, the 61.8% retracement of the up move from 1.3500 to the highs at 1.7045. A break below here would re-target 1.4400, the 22nd April 2009 lows. Resistance can be found at the overnight highs around 1.5080, and 1.5130 in the near term.

EURGBP - the November and December 2009 highs at 0.9150 are the key barriers to further Euro upside here. Last week's rally stalled at this level and remains the key barrier to further sterling losses. Euro dips should find some buyers around 0.8980 and 0.9020.

USDJPY - the yen continues to find resistance at the 90.70/80 area, a break of which could well target a move towards 91.15. The key resistance level remains at the 200 day MA at 91.90. The prospect of higher Chinese rates could well temper risk appetite and in turn boost the yen, but with speculation about Bank of Japan intervention also weighing it looks like the dollar could well trade in a fairly tight range. Some yen repatriation ahead of the financial year end could well cap any upside in the dollar in the short term in any case.
The dollar should find support around 90.20, while also finding support around the 89.30 area which is the bottom of the cloud.

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