Despite a broadly positive European session yesterday, there does appear to be some evidence that the recent rise in European stocks could be starting to show some signs of exhaustion. This isn't altogether surprising given some of the gains seen so far this year and this quarter, with the German DAX up over 20% year to date. Last week's Federal Reserve meeting has also added an extra wrinkle to the perception that the path of US interest rates this year was pointing in an upward direction, and it does appear that investors are now having to slightly readjusted this view, or perception. This alteration to investor perceptions appears to have put a short term cap on the US dollar's gains, and in the process helped put a potential short term floor under the euro, which may well explain why the DAX appears to be struggling to regain traction above 12,000. It has, on the other hand, been positive for the FTSE100 in the context of a move to new all-time highs above 7,000, but even here the follow through hasn't exactly been explosive, while the rebound in the S&P500 was unable to move beyond the previous highs at 2,120. While yesterday's economic data out of Europe was broadly positive with the latest Eurozone Composite PMI hitting a 46 month high, let's not kid ourselves that it means that we're about to see a sharp turnaround in economic activity across the entire economic bloc. A lot of the reason for yesterday's impressive number was a sharp improvement in Germany with the combination of low oil prices and a lower euro prompting a rebound in economic activity during March. The increase in economic activity also saw a sharp rise in input costs, suggesting that despite the start of QE this month, inflationary pressures have already started to rebound, which given Germany's aversion to inflation could make for some interesting discussions on the ECB council in the months ahead, and prompt fears that the German economy might overheat, if QE is allowed to run unchecked. The big problem from Europe's point of view is that while German prices appear to be on the rise, they don't appear to be anywhere else, with the ECB "inflation expectations" gauge only slightly higher from the lows in January this year. The French economy still remains a cause for concern, despite a positive showing for its service sector for the second month in a row. Manufacturing continued to disappoint with another weak reading below 50. Given yesterday's broadly positive German PMI expectations are high that today's German IFO business survey will be similarly positive despite last week's slightly underwhelming ZEW survey, which came in considerably short of expectations. Expectations are for an improvement in the March business climate to 107.3 from 106.8. Inflation or the lack of it is not only a concern in Europe, but also in the UK and the US, with yesterday's headline CPI numbers from the UK and the US both coming in at 0% for February. With both the UK and US economy both showing steady if not spectacular signs of economic activity the contrast between the two central banks could not be more marked with some on the FOMC getting itchy trigger fingers for raising rates, while the Bank of England is distinctly more dovish. It is hard to reconcile the two approaches given the similarities between the headline numbers, especially given that some of the US economic data is probably somewhat weaker than its UK equivalents. In the past few days we've had a number of FOMC members, both voting and non-voting articulating the case for a small rise in rates, with vice chairman Stanley Fischer joining the debate, along with non-voting member James Bullard. We can expect to hear a more dovish voice today with the Chicago Fed's Charles Evans due to speak in London. Last week he argued that it would be prudent to wait until 2016, arguing the case that a premature hike could do more harm than good. Today's US durable goods orders for February are expected to show a rise of 0.2% on both headline and excluding transportations. Over the last quarter the core numbers, excluding transportations have been particularly weak declining 3.2% for the whole of Q4, and thus far in Q1 were flat in January. This is particularly worrying, because it suggests that US consumers remain reluctant to spend their extra cash from lower fuel prices, and lower inflation. EURUSD - the euro managed to push back towards last week's highs above 1.1000, but was unable to gain a foothold above 1.10. This failure could prompt a drift back towards trend line support from the low this month which comes in at 1.0740, but doesn't mitigate the risk that we might have seen a low. Above 1.1050 retargets the 1.1250 area. GBPUSD - the pound continues to struggle near the 1.5000 level, despite last week's spike to 1.5170. If we push below support from the lows this month at 1.4830 we could well be set for retest of those lows at 1.4630. EURGBP - continues to look well supported pushing beyond the 0.7350 level suggesting the scope for further gains towards 0.7400. Trend line support from the March lows comes in at 0.7240, which is also the break out level from last week. USDJPY - the US dollar found support at the 119.20/30 area but does appear to be struggling with the risk we could see a move towards 118.20. We need to push back beyond the 120.30 area to suggest a retest of the 121.00 area. 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.