US markets just about finished the day in positive territory yesterday; in contrast to European markets which started the week on the back foot, but it was rather an underwhelming start to the week with concerns about the situation in Iraq never too far away. Investor sentiment in Europe wasn’t helped by rising tensions between Russia and Ukraine which also weighed in the wake of the death of 49 Ukrainian service personnel by pro-Russian separatists at the weekend, while Gazprom, in rather unfortunate timing, turned off the gas for the third time in eight years. US markets may have gained some support after the IMF downgraded its growth forecasts for 2014 and beyond for the US economy, urging the Federal Reserve to keep rates lower for longer, and this is likely to translate into a positive European open this morning. If the Fed follows suit in cutting its growth forecasts, which seems likely at the culmination of its meeting tomorrow, it will no doubt increase market expectations that interest rates will stay lower for longer, making the likelihood of a rate increase in the near term much less likely. That though is conversation for another day, with the economic focus today set to be on the latest CPI inflation numbers from the UK and US economy for May, and the latest German ZEW survey for June. With speculation rampant about the when markets can expect to see a rate hike in the coming months today’s inflation numbers could offer some colour with May prices expected to drop from 1.8% in April to 1.7%, while core prices are also expected to fall from 2% to 1.7%. For all the fevered speculation about the timing of a rate increase the fact remains that average earnings still remain well below the current CPI rate, and that’s before we even talk about retail prices which are trending at 2.5%. This needs to be taken into account before investors run away with the idea that we could get a rate increase in the next six months. Some of the heat is also expected to come out of house prices with a decline to 7.5%, for April from 8% in March. Across the Atlantic US May CPI is expected to come in at similar levels, at 2%, unchanged from April. In signs that the US housing market still remains far from fully recovered, May housing starts are expected to decline 3.9% and building permits expected to rise a measly 0.1%, down from the 5.9% rise seen in April. Sandwiched between the UK and US inflation numbers we are also expected to get the latest German and European ZEW investor sentiment survey for June, which on the face of it could well be better than the May number, though it largely depends on when the final estimates were taken, after last week’s record DAX finish at the beginning of the week. Despite the almost daily occurrence of DAX record highs in the past few weeks investor sentiment, has been steadily declining since December last year, when it hit 62, almost halving which seems somewhat perverse when you consider that the DAX is higher now than it was then. The latest survey is expected to increase to 35 from 33.1 in May. EURUSD – the euro once again was unable to break below 1.3500 yesterday finding support just above this month’s low at 1.3503. We currently have resistance at the 1.3580 level, with a break higher targeting a move back through 1.3600 towards 1.3675. If we move below 1.3480, the lows this year, we also have key trend support from the 2012 lows at 1.2045, which now comes in just above 1.3450. GBPUSD – the cable went for a little trip through 1.7000 yesterday but fell well short of the 2009 highs at 1.7045. This is a huge resistance level with a move through 1.7050 potentially triggering a sharp move higher. For now we have intraday support at 1.6910, while the major support lies all the way back at the 100 day MA at 1.6700. EURGBP – the euro appears to have found support at the November 2012 lows at 0.7960 and could well be set for a small pullback, with a slightly bullish daily candle yesterday. Any pullbacks need to get back above 0.8035 to retarget resistance at 0.8085. The pressure remains on the downside while we remain below trend line resistance from the March highs sitting just below the 0.8140 level. USDJPY – the next support lies at 101.50 and the 200 day MA, after last week’s move below 101.80, with a move back through the 200 day MA retargeting the range trade lows of last week near 101.00. The range highs remain anywhere below the 103.00 area and last week’s high at 102.75. CMC Markets is an execution only 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.