I did suggest yesterday that we consider a long trade today, provided the signal was positive, but the morning has opened with a wide spread down bar which now seems to be pointing to a continuation of the move lower, which is the long term trend for the pair. If the candle closes the day below all three moving averages as seems likely, then we can expect a move lower, perhaps back to re-test the support level at 0.8700. If you are trading this afternoon I would suggest small short positions, but with a tight stop above the open for today. The main $undamental news this morning was in Germany with the ZEW figures which came in at -5.8 against a forecast of -26.5 suggesting that the economic sentiment of the respondents was more optimistic than before, perhaps suggesting that the economy is in better shape than originally thought! In this case we should have seen the euro pound pair rise, but in fact it promptly reversed on the news!! The market is clearly not confident in the euro based solely on this news, and with Ireland on the verge of bankruptcy, this is not helping. The UK data has also been releaed with the CPI number this morning, and more details can be found on the pounds to dollars site.

The short term, medium term and long term outlook is bearish.