UK CPI expected to stabilize

The USD took control yesterday as the majors all struggled to gain any ground, with little data out to help.  The euro took a big hit after Draghi was dovish in his speech suggesting that the ECB will do more if needed, and that the ECB could buy sovereign bonds to help the economy inflation situation.  Today the EUR/USD has had a bounce back up 30 points, trading just below 1.2500.  Today’s data will be focused on the German ZEW which was very disappointing last month when it dropped into a negative figure, today the consensus is that some optimism will return with a figure of 0.9, from a previous read of -3.6.

The pound took a dive yesterday against the US dollar again, with little data to help it keeps showing its struggle to gain.  Today’s main focus will be on the CPI reading with the expected data to be the same as last at 1.2% looking for the inflation to stabilize, as since August it has dropped each month.  A lesser reading won’t bode well for the GBP as the UK are one of the front runners to raise rates mid-2015 and data now will be key to the markets’ expectations of this.  Currently trading above 1.5650 up for the day.

The yen has been the main player in the FX markets with some big rallies and falls, but the main trend of a rallying Yen still seems to be in place. The cause of this is the decision of a possible delay in the sales tax hike and a snap election which have both been rumoured and today the media was reporting confirmation that a snap election would in fact be called. The USD/JPY pair was trading above 116.50.

EUR/USD

Supports  1.2440 1.2400 1.2355   | Resistance 1.2500 1.575 1.2610

USD/JPY

Supports 116.40 116.00 115.50   | Resistance 116.80 117.05 117.75

GBP/USD

Supports 1.5620 1.5590 1.5550  | Resistance 1.5685 1.5725 1.5785