As we come to the end of the week there appears to be some evidence that the recent rally in European markets appears to be losing a little bit of momentum with the DAX seeing its worst one day fall since the beginning of January, and likely to finish the week sharply lower. Even US stocks which saw some broadly positive earnings announcements found the going difficult after some initially good momentum and weak economic data, which put the US dollar on the back foot, and crude oil hitting its highest levels this year. With the G20 and IMF meeting in Washington, Greece continues to remain front and centre of events, as apprehension continues to build on the next chapter in this Homeric saga. Reports that IMF chief Christine Lagarde refused an informal request by Greek officials to delay an agreed payment saw sentiment take a little turn for the worst yesterday, with German bunds hitting a new record low of 0.073%, while Greek bond prices slid sharply. With no deal imminent and widespread scepticism that there ever will be, markets appear to be gearing up for when a Greek default happens, and not whether one happens. Later in the day Greek finance minister Varoufakis, fresh from his meeting with President Obama, is scheduled to meet ECB President Mario Draghi, while stating quite clearly last night that Greece would not sign up for another version of extend and pretend. Unfortunately this determination by Greece is being met with an equal determination not to yield on the German side, with German finance minister Schaueble suggesting they were welcome to find the money elsewhere if they wished, as the latest episode of the Greek rock meeting the German immovable object played out. Yesterday’s weakness in the US dollar prompted a little bit of a rebound in the euro despite heightened concerns about the rising prospect of a Greek exit,. We could well see go on to see further gains in the euro today, particularly if we see evidence that inflation is starting to edge up in the euro area, while remaining benign in the US. Early this morning we will be getting the final EU CPI numbers for March, and while the annual rate is expected to stay unchanged at -0.1%, the month on month number is expected to jump sharply from 0.6% to 1.1%. If the rise in prices in Europe is not matched by a similar rebound in the US numbers later today we could well expect the greenback to come under further pressure, particularly given last night’s comments from the Boston Fed’s Eric Rosengren when he stated that he felt that neither of the two conditions that the Fed felt were necessary for a change of policy had been met, and were unlikely to be met in the near future. He went on to add that the US economy was still too weak at this point in time to consider such a move, though this isn’t a surprise given he is one of the more dovish members of the FOMC. Contrast that with comments by vice Chair Stanley Fischer who suggested a tightening would happen but it would be extremely small. US CPI for March is expected to remain at 0% year on year and 0.2% month on month. Earlier this week UK CPI inflation remained rooted at 0% for the second month in succession as lower energy and food prices contrived to keep more money in consumers’ pockets. In a week where the opinion polls continue to remain stubbornly static, the UK government will be hoping that this morning’s latest unemployment and wages data contrive to reinforce the economic competence of the current incumbents. The February ILO unemployment rate is expected to show another fall from 5.7% to 5.6% and its lowest level since September 2008. Jobless claims for March are also expected to show a fall of 29k jobs and in a neat bit of symmetry that would be the 29th monthly fall in claims in succession. More importantly average earnings for the three months to February are expected to show a rise of 1.8%, unchanged from the previous month. EURUSD – the euro continues to look supported above the 1.0500 level and higher lows of the last few days suggests we could move higher. Yesterday’s break above 1.0760 and a subsequent move through 1.0800 could well see a move back to the range highs above 1.1000. GBPUSD – four successive positive days for the pound has seen the us move back close to the recent range highs at 1.5000. If we can sustain a move through 1.5000, we could well retest the 1.5168 high seen in mid-March. For this to unfold we need to hold above the 1.4680 level. A decline back through 1.4700 towards 1.4565 keeps the risk for a revisit of the 2010 post-election lows at 1.4230. EURGBP – another attempt at 0.7150 came up short yesterday, and as such we could get a rebound back through the 0.7235 area, towards 0.7280. USDJPY – another failure to push back above 119.70 yesterday could well see the US dollar could well move lower towards the March lows at 118.30. We need to push back above the 120.70 level to retarget the highs at 122.00. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.