Having seen a fairly lacklustre session in the absence of US markets, Europe’s markets look set to open higher this morning after a rather positive Asia session as credit conditions eased in China after the Chinese central bank injected extra liquidity. In terms of the economic calendar, we’ve got a pretty light session with only the latest German and European ZEW surveys for January. If past performance is anything to go by a positive number will probably give markets some upward momentum, and it seems unlikely that the number will disappoint given that markets are at multi year highs. Having said that some of the earnings data over the past week or two hasn’t exactly been inspiring and since the last survey was done the Fed has begun its tapering program. These factors might affect investor confidence particularly as it was already at multi-year highs last month. Expectations for German economic sentiment are for an improvement to 63 from 62, while the broader European measure is expected to come in at 70.2, up from 68.3. The IMF is also expected to revise up its growth forecasts for the UK, and possibly the US and Japan for 2014, though particular attention will be on the UK given last week’s bumper retail sales numbers and tomorrow’s unemployment numbers, which could spring a positive surprise with another fall closer to the 7% Bank of England staging post. The upgrade is expected to be the second in six months and is expected to be revised up from 1.9% to 2.4%. The UK economy has come a long way since the IMF’s chief economist Olivier Blanchard ended up with egg all over his face after announcing that the UK was “playing with fire” about a year ago, but given the IMF’s recent track record, particularly in Europe, maybe it shouldn’t have been a surprise. In terms of economic data out today we have the latest CBI industrial trends data for January which is expected to come in at 12, unchanged from the December number, but still at multi-year highs. EURUSD – having pulled back from 1.3508 yesterday we’ve as yet been unable to pull back above the 100 day MA which is now at 1.3565. This keeps the pressure on the downside and a potential test towards the 1.3300 area and November lows over the next few sessions, after failing to overcome the 1.3700 area last week. A concerted move below 1.3520 and the December lows could well be the catalyst for such a move. GBPUSD – we still seem to be playing out the potential head and shoulders formation after failing to push beyond 1.6460 yesterday. We still seem to be within the broad range of 1.6250 and 1.6550. The potential head and shoulders formation still needs confirmation, but needs a break below 1.6250 to trigger the next move. Above the 1.6520 level would negate the pattern and argue for a return towards 1.6620. EURGBP – the 11 month lows at 0.8230 seem to be holding up for now which raises the risk of another rebound, but the lack of conviction does suggest we could well get a move towards the longer term objective at 0.8160/70. Any rebounds are expected to find resistance at 0.8270 and 0.8320. USDJPY – last weeks rebound has found resistance at 104.75 trend line resistance from the recent highs at 105.50. A move back below 103.70 could well signal a return to the lows last week at 102.90 on the way to a move towards 102.00. Only above 105.50 argues for a move towards 108.00. 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.