HIGHLIGHTS:

GBPUSD:Sustaining Its Downside Weakness - GBP traded further lower Wednesday wiping out its Tuesday gains to test lower prices at 4396 before closing at 1.4472.

USDJPY: Continues To Challenge Its Major Emas/Channel Base - As reversal of its Tuesday gains were seen on Wednesday allowing USDJPY to challenge its strong support zone at the 97.78 level, its major emasand the 97.49 level, its rising channel nearer term trend remains lower.

GBPUSD: GBP traded further lower Wednesday wiping out its Tuesday gains to test lower prices at 4396 before closing at 1.4472. With its declines triggered off the 1.5066 level, its April 16’09 high and a break below its rising channel still valid, attempts at further downside prices are expected towards the 1.4305 level, its Mar 06’09 high and then the 1.4111 level, its Mar 30’09 high. Its daily stochastics remains supportive of this view as it is pointing lower suggesting additional weakness. On the upside, resistance levels are seen at the 1.4662 level, its Feb 23’09 high and its Jan 16’09/Feb 09’09 highs at 1.4981/86 with a cut through there bringing further price acceleration towards the 1.5066 level, its April 16’09 high. Beyond the latter will clear the way for the resumption of the pair’s recovery off the 1.3655 level, its Mar 11’09 high. All in all, having lost its rising channel and continued to weaken, risks remain to the downside.

chart 1

USDJPY: As reversal of its Tuesday gains were seen on Wednesday allowing USDJPY to challenge its strong support zone at the 97.78 level, its major emasand the 97.49 level, its rising channel nearer term trend remains lower. But as long as a combination of the mentioned support zones remains unbroken, the pair looks to turn higher in line with its short term recovery initiated at the 87.13 zone. However, on a loss of these crucial zones, ways will be opened for declines to be triggered towards the 95.95 level, its Mar 30’09 low and subsequently the 94.62,its Jan’09 high. Daily studies are bearish and pointing lower suggesting further weakness. In order for these threats to be reduce, higher level prices are required towards the 99.68 level, its Mar 05’09 at first and then the 101.43 level, its April 06’09 high. Eventually turning above the latter will resume its short term upside set off at the 87.13 level towards the 102.42 level, its Oct 20’08 high. On the whole, despite its current weakness as long as the pair holds within its rising channel and above its major emas, its short term recovery activated at the 87.13 zone remains to the upside.

chart 2