FOREX EUROPE UPDATE - USD

This morning the US dollar has traded in a 1.2827-1.2869 range against the EUR and a 117.36-117.94 range against the JPY in Asia. The dollar has continued to fall after University of Michigan consumer confidence came out weaker than expected yesterday and PBoC Governor Zhou said at the ECB's monetary policymaking conference that China had a clear plan about diversifying its reserves.

With the greenback unable to benefit from better trade and weekly jobless claims data yesterday, it has become clear that the market is still long dollars after the EUR managed to hold its downside support at 1.25 last month. We remains medium-term bears on the dollar, where EUR is looking to aim for 1.30 again in 2-3 months.

Today there are no data releases in the US. The main event to watch is the second day of the ECB conference on monetary policymaking with ECB President Trichet, FOMC Chairman Bernanke, BoJ deputy Governor Iwata and PBoC Governor Zhou speaking on a panel discussion at 1345GMT on the role of monetary policy.