Westpac - "FX: The dollar bloc still looks tired, with long EUR and short JPY still the market preference, ahead of key US data/events:

• AUD/USD: Likely to keep testing a little lower, with 1.0345/60 at risk of being tested as a long spec market squares up a little. But with global sentiment mostly positive and a quiet local calendar, a grind back to 1.0500/50 would be no surprise.
• NZD/USD: The multi-month outlook for NZD/USD outlook remains positive, targeting 0.8475, but extreme long positioning plus a dovish RBNZ on Thursday could provide better buying levels this week. That is as long as the key 0.8215 level continues to hold.  
• EUR/USD: Dips have been shallow as EZ financial conditions remain supportive. Specs are starting to get on board as Japan also rebuilds EUR holdings. FOMC meeting won’t hurt so we remain bullish beyond our long-standing 1.35 target.
• USD/JPY: Specs are reluctant to take profit on longs but we don’t share their optimism on USD. We see multi-week risks back to 85-87 given the BoJ is unlikely to come up with much new on 14 Feb.
• Asia. We have seen a dramatic correction higher in most USD/Asia pairs in recent sessions. Investors have dumped equities in markets such as Korea and to a lessor extent Taiwan given concerns around JPY weakness and a softer outlook for tech. We don’t expect this weakness to be sustained though, with Asian growth improving and broader risk appetite still supportive. INR remains our preferred long, particularly given the RBI’s willingness to support growth."