Throughout the course of the crisis in Europe the German economy has managed to stand apart from the mayhem around it, finding itself insulated in a way that has caused not a little head scratching in some quarters. It would appear that this good fortune could well be starting to run out after the disappointing IFO numbers yesterday. The numbers missed on all measures, and given the surprise rebound in the ZEW survey last week which is largely based on consumer expectations, it would appear that German business is much less sanguine about the overall outlook going forward. Business confidence slipped to its lowest levels since mid-2009 and there is a fear that the crisis in Europe is now starting to put sand in the gears of the German economy. Today’s forward looking October GFk consumer confidence numbers aren’t expected to change too much from previous months, coming in at 5.9, but it is data later this week which could well prompt greater concerns. If German unemployment numbers were to start to edge higher then alarm bells could well start to ring that little bit louder, at a time when German Chancellor Angela Merkel is starting to face opposition within her coalition at the increasing costs of aid packages for what is turning out to be a long line of struggling European countries. Pressure is increasing on Germany to grant Greece more time to meet its commitments with France lining up to urge them to acquiesce in its opposition to such a measure. General strikes and disillusion are growing in Greece with the likelihood that even if the Greek government were to agree on a package of measures to the tune of €13bn it is highly unlikely that they would be able to implement them. With the troika report once again delayed the uncertainty surrounding the extent of the Greek budget gap continues to grow with each passing week, with one report putting it as high as €20bn. These fears about a slowdown in Germany also explain the recent reticence by German Finance minister Schaeuble not to push Spain too hard towards requesting a bailout, due to fears that market attention could turn to Italy. Spain’s reluctance to ask for a bailout is purely political as Prime Minister Rajoy looks ahead to a regional election on October 21st, while the lower borrowing costs give him the luxury of more time, against a backdrop of regional political difficulties. In the US the latest consumer confidence numbers for September are set to show an increase to 63.2, from August’s 60.6 in the wake of the recent Fed action to help boost the US economy. The Richmond Fed manufacturing index is also set to show a mild recovery from -9 in August to -6. EURUSD – downward pressure continues to weigh on the single currency with yesterday’s low at 1.2890 taking us closer to the 200 day MA at 1.2830, which needs to hold for the recent rally from the July lows to be sustained. It needs a push below 1.2830 to retarget the 1.2650 level with key trend line support from the 1.2045 lows now at 1.2610. Putting to one side the main resistance from the 1.4940 highs at 1.3220, we have trend line resistance from the recent highs at 1.3175 currently sitting at 1.2990. Only a move above 1.3240, targets 1.3495, the 50% retracement of the entire down move from 1.4940 to 1.2045. GBPUSD – cable continues to trade between support at 1.6150 and the larger resistance at 1.6300/10. The risk remains for a move back towards 1.6050 despite the pounds resilience and yesterday’s rebound from 1.6180. Below 1.6050 we have trend line support at 1.6015 from the August lows at 1.5490. It needs a move above resistance at 1.6305 to target a move towards 1.6590, last years August high. Only a break below 1.5860 has the potential to target 28th August lows at 1.5755. The long term trend line support lies at 1.5620 from the 1.5240 lows. EURGBP – the 0.7950/60 remains a key support level for the euro, given it was strong resistance in August and is the main obstacle to a return towards the 0.7880 level. To restore upward momentum we need to see a bounce back through the 0.8050 area to retarget the highs two weeks ago. This area acted as strong resistance through August. USDJPY – the US dollar continues to remain weak pushing below the 78.00 level increasing the likelihood of a move towards the lows earlier this month at 77.25, which in turn could open up the lows this year at 76.04. To stabilise in any meaningful way we need to take out trend line resistance at 79.15 from the 20 April highs at 81.80, as well as the 200 day MA at 79.30. The 200 day MA at 79.31 remains the main obstacle to a return towards the highs last month at 79.70