Sterling seems to be the strongest currency on the board today as GBP/JPY breaks to new highs, EUR/GBP is flirting with multi-year support, and GBP/USD is holding up better than any of the dollar pairs. The markets are still very much caught in light volume ranges ahead of Thursday's ECB announcement, as well as Friday's Non-Farm Payroll, not to mention the summer winding down.

I have been watching this weekly EUR/GBP level now for a while and would like to start getting the feel for a cross or two to carry into the end of the week economic data in case the dollar pairs remain sloppy. EUR/GBP is pointing at a test of an extremely significant support level just below the 0.6700 level.

Moving down to the 3-hour chart, first wait for a trend line break down to 0.6725, followed then by a retracement to the breakdown point to get short at 0.6735. Stops should be above 0.6755 and the take profit will be 0.6695.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

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