The greenback was mixed in Tuesday trading, falling against the euro and sterling while rallying versus the yen. Economic data from the Eurozone and UK helped support their respective currencies while the US had a dearth of reports in the session. Separately, US equity bourses benefited from Warren Buffett's announcement to offer support for bond insurers, providing up to $800 billion in municipal bonds. The yen slumped across the board, falling to 107.52 against the dollar and 157 versus the euro as the Dow Jones rallied by over 1.3%.

On Wednesday, the US economic calendar picks up with the release of retail sales and Fed Chairman Bernanke's Congressional testimony. Retail sales are estimated to fall by 0.2% in January extending December's 0.4% decline. The excluding-autos retail sales are seen edging up by 0.2% from a 0.4% drop a month earlier. Fed Chairman Bernanke will testify before Congress and is expected to reiterate the FOMC's readiness to support the economy and ease rates further in the face of additional weak US economic data.

Euro Bounces
The euro rebounded back above its 100-day moving average against the dollar, recovering toward the 1.46-level. Benefiting the single currency was Germany's ZEW survey which recovered from a 15-year low in January at -41.6, as economic sentiment improved to -39.5. The current conditions survey deteriorated to 33.7, down from 56.6 a month earlier and sharply lower than estimates for a smaller decline to 50.8.

Traders will look ahead to December industrial production, seen improving on a monthly basis - edging up by 0.6% and reversing November's 0.5% decline while slipping to 2.3% on an annualized basis from 2.7%.

GBP Stabilizes on Data

UK inflation reports helped prop the sterling higher as the consumer price index firmed above the BoE's target at 2.2%, versus 2.1% from a year earlier. On a monthly basis though, CPI fell by 0.7% compared with a 0.6% increase in December. The RPI-X in January climbed by 3.4% from a year earlier at 3.1% while the headline firmed to 4.1% versus 4.0%.

In the session ahead, UK economic data include January ILO unemployment rate - seen unchanged at 5.3% and the claimant count.