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Sterling has continued falling throughout the trading day with its trade weighted index falling briefly back through 80.00 and its 200 day MA.
It is also interesting to note that the sterling index posted a bearish engulfing candlestick pattern on Wednesday which is a traditionally bearish signal.

The US dollar index, on the other hand continues to gain support, and stopped just short of its 50 day MA, and trend line resistance between 76.00/10 area. These resistance levels have acted as a cap on the dollar since late April so a break and close above these levels could provoke a large dollar snap back.

EURUSD - the Euro managed to hold above its lows of the last week at 1.4810, hitting a low of 1.4805 which also happens to coincide with the 50 day MA which has supported this current up move in the Euro since April. A daily close below these lows could signify a sharp correction lower towards 1.4650 and probably lower. The declining highs at 1.4975/80 remain the main barrier to further downside.

GBPUSD - the cable overshot its support lows of 1.6510/20 this afternoon hitting 1.6460 in the process. This level has so far held but the emphasis has re-shifted to the downside as the market digests the consequences of the ongoing fiscal deficit and the lack of any clear strategy to deal with it. Emphasis has shifted to the downside with resistance at 1.6620 and a potential test of 1.6300 on the horizon.

EURGBP - the Euro has continued to gain at the expense of the pound breaking through the 0.8970 resistance area and making a high of 0.9011. The cross needs to stay above the old resistance at 0.8970 to push on to 0.9070, however the current momentum is looking a little stretched so we may see a slight pull back towards 0.8920 first.

USDJPY - yen strength continues to dominate as the pair struggles to push towards the October lows at 88.00. The downside risk remains intact while below trend line resistance at 89.80.