Dollar: We are surprised that the dollar is not showing more week ending short covering, or even a wave of fresh buying as the press is carrying stories that the ECB is poised to extend its bond buying program. Another issue that should be providing the dollar with more support is a suggestion from Fed’s Rosengren yesterday that US asset prices are moving higher at a pace that could require some type of policy action. The Fed’s Bullard has countered the hawkish bent somewhat by suggesting rate hikes should be put on hold until prices show signs of any recovering. Therefore the Fed influence to start today is countervailing but a US a CPI comes in above +.2%. The inability to hold above 92.80 could also set the stage for a poor finish to the week.

Dec ’17 Dollar Index Daily Chart

Euro:  As suggested in the dollar coverage, ideas that the ECB is set to extend their bond buying program for another six months is the most significant undermine of the euro this week. If US inflation shows at expected or even above inflation, there could be more erosion in the euro early today. Traders should also be aware of multiple US Fed speeches today as that could put significant volatility into the currency markets. Critical support in the euro is seen at 11850 and it could take a rally above 11881 to throw off the bearish track.

Dec ’17 Euro FX Daily Chart