FX afternoon update - Dollar continues to fall as risk appetite rises

LONDON (ShareCast) - Sterling and the Euro were both boosted today after the respective central banks outlined the measures they were looking to take over the coming months with respect to their respective economies.

Sterling was boosted by the fact that only £25bn was added, and not the £50bn the market was expecting, while the Euro was boosted when Trichet indicated that the ECB was paving the way for the withdrawal of stimulus measures. This has pushed the dollar lower this afternoon while stock markets on both sides of the Atlantic have gained on the back of an increase in risk appetite.

EURUSD - has managed to regain the 1.4850/60 resistance area, and while above this key level, the risk for further gains towards 1.4980 and 1.5065 cannot be ruled out. However with momentum looking stretched a move back below 1.4850/60 re-targets 1.4780.

GBPUSD - the pound was boosted by the QE measures today but is currently finding resistance at the 1.6640 area, where there is trend line resistance from the August highs at 1.7045. Momentum is starting to look a little stretched at these levels, and the risk is for a drift back towards 1.6440/50 area.

EURGBP - currently becalmed in a range between resistance at 0.9000 and the lows around 0.8920, the market needs a break either side to determine future direction.

USDJPY - having made lows at 90.00 today the dollar has failed at the 90.65/70 resistance area, which prompted yesterday's spike up to 91.20. While below the 90.70 bias remains to the downside.