The dollar enjoyed a strong rally on Thursday as short-covering accelerated during the US session.

Important support at 1.4915/20 was broken at midday in London and 1.4900 was broken in early New York trade. 1.4850 provided support for much of the New York afternoon before giving way late in the day. Prices tumbled to 1.4822 before stabilizing. 1.4805/15 is key support on both the short and medium-term charts. Rebounds were unable to overcome the 1.4875 area in afternoon trade despite the awful US budget news and a poll of economists which show the Fed on hold for another 10 months, which should give you an idea of the shift in sentiment seen today. Normally news like that would have sent EUR/USD soaring.

AUD/USD was blistered from a technical perspective after posting an outside day key reversal from new trend highs today. It fell as low as 0.9208 before bouncing to 0.9229.

Cable built a base in the 1.6520 area as EUR/GBP sales helped cushion the pound from the worst of the dollar correction. 1.6590/95 is resistance near-term with short-covering seen above 1.6600. Tread lightly, as always.

USD/JPY rallied as high as 90.60 before exporter offers capped the rebound. Selling of EUR/JPY on increased European banking jitters helped cap the buck. It closes at 90.36.