To recap, after President Yanukovych’s failure to sign the AA/DCFTA with the EU at the Vilnius summit on Friday, he returned to demonstrations in Kiev, which numbered perhaps ten thousand or so Friday night.

Early on Saturday morning (around 4am) it seems riot police attempted to clear a couple of hundred or so remaining demonstrators from the Euromaidan, and appear to have been over zealous in the use of force, with scores of demonstrators injured or arrested.

The reaction of the opposition was furious, with tens of thousands of demonstrators massing later on Saturday, and calling for the resignation of those responsible for ordering the use of force on demonstrators. The government’s reaction was a mixed one, initially blaming provocation by demonstrators, but later backing down, and offering an investigation.

The opposition subsequently called for a mass demonstration for today, which was met with the City of Kiev Council announcing a ban on demonstrations in downtown Kiev until January 7, 2014.

The head of the presidential administration, Serhey Levochkin, resigned, along with a number of members of President Yanukovych’s Regions’ party. Levouchkin’s resignation is seen as very significant in that he is regarded as a political heavyweight within the cabinet, who had some links to the opposition. His resignation appeared linked to a disagreement over the handling of the crisis.

Today has seen huge demonstrations – likely well over the 100,000 that are reported to have attended last Sunday’s demonstrations, and with some estimating well over 300,000. Demonstrators took over the HQ of Kiev City Council, and appear to have attempted to move on the presidential palace/residency – only to have been fought back by riot police.

The opposition are calling for the resignation of President Yanukovych, and the Azarov government, and are talking in revolutionary terms now – I.e. over-throwing the incumbent administration. They have called for a general strike, the blockade of government buildings and continued demonstrations over the next few days.

There have been reports that the government is considering declaring a state of emergency for December 2, 2013. PM Azarov has announced that the government is still in control, but this appears to be somewhat out of touch.

The situation is clearly very volatile and appears dangerous.

The Yanukovych administration has concentrated power and wealth around it over the past few years, and the stakes are rising now for all sides, especially after the ruling administration’s decision to imprison the former prime minister, Yulia Tymoshenko. Yanukovych would now probably assume that his forced exit from government would also likely see legal measures taken against him and his entourage for the actions they have taken while in office – the opposition have called for Yanukovych’s impeachment. The opposition’s call for revolution would also likely leave them vulnerable to legal action should Yanukovych manage to re-establish a grip on power – which does appear somewhat unlikely at this stage.

The next few days will be critical, clearly. The opposition appear to now have momentum on their side and will aim to use this to their advantage. Yanukovych faces the choice of either trying to re-impose control through the use of the security services or police, or negotiation. But we seem to be in an almost repeat now of the situation with the first Orange Revolution in 2004. At that time the police and security services generally refused to act against opposition demonstrators, but this time around their ranks have been swelled by the president’s supporters from other regions of Ukraine. There has already been much more aggression/violence used in attempts to control the crowd than had been the case in 2004/05. Yanukovych must though be mindful that any attempt to follow President Lukashenko’s actions in Belarus by using more far reaching force against demonstrators would likely sell them liable to sanctions from the West – given that they have significant financial assets in Western capital they are likely to be reluctant to take such a course of action.

It will be interesting to see if President Yanukovych is able to maintain the support of the Region’s party, and the oligarchs which fund and dominate the party. Levouchkin’s departure must be a worrying development for Yanukovych, as it implies splits at the very top of the regime.

President Yanukovych, and/or the oligarchs around him, might just look for some form of compromise solution, perhaps the creation of a caretaker administration pending fresh elections. The obvious question then would be whom could possibly head such an administration who might be acceptable to all sides. Herein I thought it was interesting to see the chocolate oligarch, Petro Poroshenko, in the midst of the demonstrations today, speaking to the crowd. Poroshenko, a former head of the national security council, foreign minister and head of the NBU council under former President Yushchenko, is perhaps someone who could provide such a link between the outgoing Yanukovych regime and the opposition. Assurances would presumably have to be given to Yanukovych and his team of safe exit to another country or immunity from prosecution perhaps.

Tomorrow is going to be critical, and PM Azarov has already warned that the unrest threatens the stability of the UAH. Ukraine’s macro position is already fragile, and events over the past week or so will hardly help. The clear danger in these difficult and uncertain times will encourage the population to increase purchases of FX, and this could pressurise the already fragile banking sector, and further deplete limited FX reserves.