Asian Market Update:

The dollar recovered marginally from a record low against the euro on Monday, supported by strong U.S. consumer sentiment and expectations for hawkish comments from the Fed chairman in testimony this week. Analysts expect Ben Bernanke to tell the U.S. Congress in monetary policy testimony on Wednesday and Thursday that the Federal Reserve is more worried about a flare up in inflation than it is that housing market turbulence may seriously damage the economy.

That helped the dollar recover from a record low of $1.3815 struck against the euro on Friday during a month-long downtrend driven by a fall in retail sales and fears the U.S. subprime mortgage crisis could frighten foreign investors away from U.S. credit markets. At 0230 GMT, the dollar was quoted at $1.3781/84 against the euro.

Last week, ratings agencies Standard & Poor's and Moody's Investors Service warned of downgrades to billions of dollars in risky mortgage debt, undermining the dollar. The dollar trade-weighted index was up modestly at 80.59 on Monday, after hitting a 2-1/2-year low of 80.442 at the end of last week.

U.S. stock markets rallied to record highs on Friday on optimism about consumer sentiment. The Reuters/University of Michigan Surveys of Consumers said its preliminary July consumer sentiment index was the highest since January. Although the U.S. reported a steep drop in retail sales for June, traders said the consumer sentiment data supported the

dollar because it was forward looking. Still, many traders expect benchmark U.S. interest rates to stay on hold, while other central banks keep tightening monetary policy.

A public holiday in Japan thinned trading volumes in Asia. The yen was a shade weaker at 122.10 per dollar and seemed to be getting sold against the New Zealand dollar after data showed second-quarter consumer prices in New Zealand rose more than expected. The kiwi traded up to $0.7898, its highest since it was floated in 1985.

Last week, the RBNZ said it will continue to intervene in markets if it saw the currency at extreme levels.


Technicals:

EURUSD
Bullish momentum is still there and a break of 1.3810 will lead to 1.3835 and then 1.3890/00. Support at 1.3760.

GBPUSD
A break of 2.0365 will lead to the 2.0395/00 area and then to 2.0450 and 2.0500. Support at 2.0280.

USDJPY
Next resistance at 122.55 and 122.85. Support at 121.80 and 121.05.

EURJPY
Bullish with next target at 168.95/00. A break there can lead to 169.20 and 169.70. Support at 167.70.

AUDUSD
The bullish run continues. Record high fro the Aussie since 1989. Resistance is at 0.8800 Support at 0.8650.