Yesterday\'s rally in UK and US markets which saw the Dow post a new four year high, should translate into a broadly positive open in European markets this morning, as the rest of Europe plays catch up on yesterday\'s ISM induced move higher.

Whether Europe manages to hold on to these gains will likely depend on this morning\'s economic data from Europe with the final prints for Italian, French, German and Eurozone manufacturing PMI data, as well as German unemployment data for April.
The expectation for the PMI data isn\'t going to be high with contractions expected on all measures with readings of 46.6, 47.3, 46.3 and 46 respectively.

The one positive is likely to be German unemployment data which has run contrary to the rest of Europe\'s unemployment data for months now, slipping as it has to post reunification lows of 6.7%. Another drop is expected in April with a drop of 10k expected.

There the good news is expected to end because the Eurozone unemployment is expected to rise further, with a March figure rising to 10.9%, which is likely to prompt further calls from EU leaders affected by rising unemployment to call for an easing of austerity, from EU leaders and Berlin is particular.
This is likely to be resisted by politicians in Berlin, conscious of the fact that the worst of the crisis appears to be staying outside their borders for now.
In any case the topic of the European economy is highly likely to be mentioned at today\'s meeting of EU finance ministers, which is supposed to be discussing EU bank capital requirements rules, even if it\'s not supposed to be on the agenda.

In the UK yesterday\'s manufacturing PMI\'s numbers were a little disappointing; particularly the new orders component which dropped to 49, but the headline number remained the right side of 50 at 50.5. Today\'s construction PMI is also expected to slip back from March\'s 56.7, but it is still expected to come in at 54.
There the positive news is likely to end with mortgage approvals for March expected to slip back to 48k while March net consumer credit is also expected to remain weak at 0.3bn. The money supply numbers will be closely watched with an eye on next week\'s Bank of England meeting and any further possible QE, especially if they remain weak.

In the US investors will be hoping for a continuation of yesterday\'s positive sentiment with the latest ADP payrolls numbers for April. Expectations are for job gains of 175k, down from 209k, still broadly positive, but it is noticeable that the gains are starting to head in a downward direction since we saw the heady heights of nearly 300k at the beginning of the year.
US factory orders for March are also expected to be announced with a decline of 1.5% expected, down from February\'s 1.3% rise.

EURUSD - another failed attempt to overcome trend line resistance at 1.3285 from the March highs saw the single currency slip back yesterday and as such the onus remains for a continuation of the sideways consolidation seen since mid-February. A break through 1.3300 targets the 200 day MA at 1.3475.
The lower line support on the triangle now lies at 1.3050, while there is also trend line support from the 1.3000 April lows at 1.3215.
The break of the larger triangle continues to remain the primary pattern and could well signal a 500 point move if it breaks out.
To open up the lows this year at 1.2630 we need to see a concerted break below 1.2975.

GBPUSD - we saw a second successive negative day for the pound yesterday, however it did find support around the 1.6180 level. The positive momentum remains intact but the trend line resistance at 1.6320 from the 2011 highs at 1.6750 should continue to cap any further gains in the short term given the overbought momentum.
This suggests we could see a downward test towards 1.6050 and the highs at the beginning of April.
Only a move below 1.6050 retargets the long term trend line support at 1.5930 from the January lows at 1.5235 which continues to act as support on the downside.

EURGBP - after the lows of earlier this week the single currency attempted a rally back through the 0.8200 level before sliding back. The momentum as such remains for a move towards the 2010 lows at 0.8065.
Only above the resistance at 0.8220 would retarget the larger resistance at 0.8280 as well as trend line resistance at 0.8300 from the February highs at 0.8505.

USDJPY - the US dollar found support at the 79.70 level which provoked a rally back towards the 80.42 cloud resistance level. This failure to get above the weekly cloud resistance keeps the current momentum skewed towards the downside. A break below 79.70 would then target 79.20 initially on the way to 78.35 and the 200 day MA.
The 80.42 cloud line should now act as a resistance level and for the dollar to stabilise we would need to see a close back above this key level.