The dollar edged up Wednesday

The dollar edged up Wednesday after the release of strong U.S. business data and ahead of the release of minutes from the Federal Reserve's June meeting.
The WSJ Dollar Index, which measures the dollar against 16 other currencies, rose 0.2% to 87.23.
The dollar has benefited from demand for assets seen as safe in the wake of the June 23 U.K. vote to leave the European Union. But analysts say the greenback's rise will be put to the test this week by new economic data and reports.
A stronger-than-expected reading of the The Institute for Supply Management's June nonmanufacturing index Wednesday helped ease concerns about a slowdown in the sector.
Investors are also looking to the release of minutes from the Fed's June 14-15 policy meeting at 2 p.m. EDT for more insight into officials' concerns about a slowdown in the broader economy and about the impacts of the Brexit vote. The Fed kept rates unchanged at the June meeting, and markets are now pricing in little chances of an interest-rate increase this year.
Friday's June U.S. jobs report will also offer a snapshot on the health of the labor market after a disappointing May reading.

EUR/USD is showing little movement

EUR/USD is showing little movement on Wednesday, following losses in the Tuesday session. The pair is trading at 1.1060. On the release front, German Factory Orders disappointed with a flat reading of 0.0%, shy of the estimate of 1.0%. The US will release ISM Non-Manufacturing PMI, with the estimate standing at 53.3 points. The spotlight will be on the central banks, as ECB President Mario Draghi addresses an ECB event in Frankfurt, while the Federal Reserve will release the minutes of its June policy meeting. On Thursday, employment numbers will be in focus, with the release of ADP Nonfarm Employment Change and Unemployment Claims.

Japanese indicators

Japanese indicators were mostly soft last week, underscoring a weak economy. Household Spending and Retail Sales both posted declines, as the Japanese consumer continues to hold tight to her purse strings. Tokyo Core CPI continues to point to deflation, recording a second straight drop of 0.5%. Still, the yen held its own last week, benefiting from its safe-haven status. As well, the Bank of Japan remains reluctant to adopt further easing, so the yen could continue to rise and move towards the symbolic 100 level.

Sterling extends falls

 Sterling extends falls, dropping more than 1.5% against the dollar to a 31-year low of $1.3055, leaving open the potential for a break below the $1.30 level. Technical analysts see little below $1.30 in the way of chart support, with low volume and high volatility leaving the potential for more substantial falls. Commerzbank technical analysts cite a 1992-2016 support line at $1.2972/65. Below that, they say $1.2750 would be the "last defense for the $1.0463 1985 low", although Rabobank cites a 61.8% Fibonacci extension level at $1.2459. EUR/GBP hits a 2.5 year high of 0.8546, just shy of the October 2014 peak of 0.8547; GBP/JPY slides to a three-and-a-half year low of 132.66,

Analysts have warned Brexit

Analysts have warned Brexit could diminish the pound's prestigious status as a reserve currency for central banks and governments. Fiera Capital's Jonathan Lewis the likes of the New Zealand, Canadian and Australian dollars--which have risen in the vote's aftermath--could be the main beneficiaries if sterling does fall out of favor. He notes those countries have strong balance sheets and free markets, which will make them an attractive alternative to sterling. Central banks hold assets denominated in reserve currencies--most often the dollar and euro--that they can use to protect their own foreign-exchange rates