I highlighted the technical predicament for the pair yesterday here.
And it is playing out by the book as cable now falls past below support around 1.3436-55 to fresh lows in a month. The low today touched 1.3406 with the pair now holding around 1.3420.
Keep below the support region of 1.3436-55 (this week's lows to the 50.0 retracement level) and sellers will hold the next leg lower in the pair. That will be the important point to watch ahead of the daily close.
If so, the 1.3400 level might offer some mild support moving forward but we could see the downside extend towards the 38.2 retracement level @ 1.3385 next. If that gives way, I fear it is going to be a rather slippery slope for cable all the way back towards 1.3200.
It's all about the dollar now and with risk looking nervy and markets having to consider a potentially more hawkish tilt ahead of March, it is tough to go against the greenback especially when the charts are also siding with the currency.