The present unclear picture emerged in today’s early European trading with the EUR behaving controversially after data hint that inflation in the Eurozone is still moving higher. What’s more, the much-debated interest rate question reveals nothing at all about who will raise interest rates sooner and faster to fight inflation - the U.S. or the Eurozone. A fact is that the U.S. has more upward interest rate potential from the present much lower levels than the Euro, but that is all we have right now. And this stands against the still prevailing gloom of disturbed credit markets and an ailing economy.

The technical view advocates standing at the sidelines until more clarity emerges, as outlined below. Watch the market’s action following several speeches by both ECB and U.S. Fed members today, all between 15:30 and 17:00 CET. And since everyone is snooping for any hints today, even the weekly U.S. oil market EIA report (16:30 CET) and the U.S. Treasury budget for May 2008 (20:00 CET) could have market influence.


Intraday Market Outlook for Day Traders

EUR / USD
The rapid gains in the EUR / USD evaported quickly and went down to 1.5453, then recovered to its current trading level of 1.5492. We are waiting to see if the important support zone between 1.5450 and 1.5400 is broken in order to gain a clearer picture. We don’t expect this to happen today

GBP / USD
In the GBP / USD, currently trading at 1.9570, there is also a question of whether the downtrend will continue because support at 1.9490 must definitely be broken to confirm that the downtrend is continuing. Stand aside for today.

USD / CHF
The USD / CHF has recovered again to its still-valid resistance zone between current prices at 1.0390 and 1.0550. We do not see sufficient market movement for a tradeable position today.

USD / JPY
After a steep rise, the USD / JPY is currently trading at 107.40. We expect at least a consolidation on this level, but have no specific forecast.