There are no major reports due from the U.S. or other major economies today so dollar pairs could simply move sideways for the rest of the day. Keep in mind though that there are ongoing tensions between North and South Korea again, which could boost risk appetite and the U.S. dollar. However, the Federal budget balance release during the U.S. session could revive concerns about sequestration, which could keep dollar rallies at bay.
The lack of reports from the euro zone could keep EUR/USD stuck inside its range for the time being as it currently found support near 1.3000 and resistance close to 1.3100. Last week, the ECB kept rates on hold but Draghi affirmed that the euro zone would rebound later on in the year and this could keep EUR/USD above 1.3000.
The pound has been selling off aggressively so there might be some profit-taking at the start of this week as there are no top-tier data due from the UK. The manufacturing production and trade balance, which are just medium-tier reports, could have a bit of impact on pound movement. Manufacturing production is projected to stay flat in January while the trade deficit is expected to shrink slightly from 8.9 billion GBP to 8.8 billion GBP.
USD/JPY has been on a tear lately as the pair recently broke past the 96.50 level. This suggests that yen bears have enough firepower left to eventually push the pair even higher. Tensions in the Korean peninsula could be negative for Asian currencies as the region is being put at peril. Earlier this week, Japan's tertiary industry activity index missed expectations and posted a 1.1% decline.
Commodity Currencies (AUD, CAD, NZD): Neutral
Commodity currencies are moving sideways for the past few days as there are no major reports so far. AUD/USD is stuck between 1.0200 and 1.0300 while NZD/USD is cruising below the .8300 mark. USD/CAD has also taken a break from its rallies and is currently moving between 1.0225 and 1.0300. The top-tier reports aren't due until Thursday when the RBNZ will make its monetary policy statement and Australia will print its employment report but be wary of traders that are pricing in expectations as early as today.