The US dollar reversed some of Friday's losses ahead of tomorrows FOMC meeting while sterling lost ground after monetary policy committee member, Kate Barker suggested that the UK could see a return to a quarter of negative growth, but she thought it unlikely that the UK would suffer a "double dip".

However poor housing data for March, released this morning has prompted fears that the UK could suffer just that, after posting a 0.1% rise the smallest ever rise for this time of year.

Rating's agency Moody's also warned that the U.S. and U.K. are "substantially" closer to losing their AAA credit ratings, with both nations spending about 7 percent of this year's revenue on debt payments. They also expressed concerns about Germany and France's ratings.

Despite this warning the US dollar rebounded on fears of further fiscal tightening in China as commodities continued to lose ground, while the Euro slid back even as European finance ministers met to discuss a framework to help Greece if it was felt necessary when they come to roll over their looming bond maturities.

There is still considerable discord amongst member states about the prospect of a and type of bail-out with the Netherlands finance minister coming out against a bailout, putting the Dutch firmly in the German camp who are opposed to any type of bail-out.

EURUSD - the Euro was unable to break through the channel line resistance from the 1.5145 highs, and this continues to keep a cap on the market with the resistance now at 1.3780. Any close above 1.3800 could well precipitate a move towards 1.4000, but for the moment that seems unlikely.
The Euro broke below the old range highs at 1.3710/20 and while below the single currency looks to re-target 1.3620. The key downside support remains at 1.3485 on a daily close, with interim support around 1.3710/20.

GBPUSD - Kate Barker's comments about a possible slip back to negative growth has wiped out all of Fridays gains. The failure to break above the next resistance around late Friday 1.5200 has seen continued pressure on the downside, while a break and close above 1.5200 could well target 1.5330.
While below 1.5120 the pound could well slide back towards 1.4930.
The key downside level on the cable remains at 1.4850, the 61.8% retracement of the up move from 1.3500 to the highs at 1.7045. A break below here would re-target 1.4400, the 22nd April 2009 lows.

EURGBP - No real change on the cross here as we remain stuck in a range here with the triple highs at 0.9150 being the key barriers to further Euro upside here. Last week's rally stalled at this level, and remains the key barrier to further sterling losses. Euro dips should find some buyers around 0.8980 and 0.9020.

USDJPY - no real change on the dollar here, stuck in a broad range between the 91.15 resistance and highs of late last week and the lows of last week at 90.20. The key resistance level remains at the 200 day MA at 91.85. We would need to see a break out of this range to gauge clues as to further direction, but while below the 200 day MA the downside pressure dominates.

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