In Thursday’s European session, the US dollar continued to recover the losses it suffered earlier in the week. The euro/dollar pair fell to 1.1827 after a bounce to 1.1906. The pound/dollar pair resumed its slide, dropping to 1.2853.

Downwards pressure on the pound increased after MPC member Saunders’ speech as well as from the euro/pound cross after consumer inflation data from the Eurozone.

There’s a strong support for the euro/dollar at 1.1818 – 1.1825. Everyone’s attention is turned towards the dynamics of the euro/pound cross. If the pair breaks through the trend line on the 4-hour timeframe, it’ll continue falling to 1.18 and beyond. The euro is currently falling against the dollar under little trading volume, meaning that there are no buyers at 1.1825.

Later today, the US will publish data on consumer income and spending, pending home sales, the personal consumption expenditure price index and the Chicago PMI. If the data is weak, we could see an upwards correction. If the data meets or exceeds market expectations, the market will start bracing itself for Friday’s nonfarm payrolls report.