Despite a positive session in the US yesterday European markets still look likely to open mixed this morning as the overall narrative of this week continues to be one of concern about valuations that are starting to look a little pricey. This combined with the return of a little uncertainty about how events in Ukraine might continue to unfold has seen some investor’s cash out of some of their more exposed positions. It is therefore somewhat ironic that the declines of the last two days, which have wiped out all of last week’s gains, have been set against a backdrop of growth upgrades from the IMF, for the US, UK and Germany and some improvement in broader economic data. That however appears to be the consequence of the market starting to price in some form of normalisation of monetary policy, particularly from the Federal Reserve and the Bank of England, while the failure to add to stimulus by the Bank of Japan and the European Central Bank has also probably played a part. The end result is that elevated stock market valuations, adjusting to a steady slowing of the stimulus tap, start to become a little less appealing as the ability to generate profits starts to matter a little more. Today’s focus is likely to be on tonight’s publication of the most recent FOMC minutes, in the wake of Janet Yellen’s comments of “around six months” on the timing of a potential first rate hike, in her first post meeting press conference, which she felt compelled to clarify just over a week ago. These minutes could well add some extra colour around the decision to drop the 6.5% guidance threshold to unemployment, as well as the other measures the Fed has decided to look at when making future decisions about any decisions to cut back on stimulus in forthcoming months. Before that we have the latest February trade balance data from Germany and the UK, which are expected to come in like chalk and cheese. Germany’s trade balance is expected to come in at a surplus of €17.9bn, despite a stuttering economy as it continues to export much more than it imports, while the UK on the other hand is expected to show a £9.3bn deficit, despite a significant pickup in economic activity as shown by yesterday’s much better than expected manufacturing data. It has also been reported that Greece could well make a return to the bond markets with a €2bn 5 year bond, as early as today. This would herald a remarkable turnaround for the beleaguered country, but you have to ask who in their right mind would want to take a chance on a country that haircut its previous bondholders to the tune of 69% as recently as two to three years ago, and where the political and economic situation remains extremely unpredictable, and which currently has an unsustainable debt to GDP ratio of 177%, and still rising. EURUSD – a weaker US dollar continues to underpin the euro, having found support near the 100 day MA and 1.3670 trend line support from the 1.2760 lows from July last year. Only a move below 1.3640 could well argue for a move towards the February lows at 1.3475 while below 1.3820. We could well see return to the highs last week, while a break through the 1.3850 level would suggest a retest of the recent highs at 1.3970. GBPUSD – the pound has managed to push beyond trend line resistance from the 1.6820 highs at 1.6730, and could well be set to revisit the highs this year. Trend line support in the interim comes in around 1.6540 from the November lows at 1.5855. EURGBP – the downward pressure on the euro continues to push down towards the March lows at 0.8205. A move through here has the potential to target the lows this year at 0.8158. For now the 0.8300 level appears to be capping things for now. The resistance at the 200 day MA at 0.8410 remains a key obstacle to further gains. USDJPY – having broken below last weeks low at the 102.70/80 level the risk now opens up for move towards the 101.20 area and March low. It was prudent to take note of the bearish reversal daily candle from Friday, and any recovery now needs to push back through 102.80 to stabilise. A move through 101.20 opens up the 200 day MA at 100.75 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.