We had an interesting start to the week as the EUR failed to take out new highs after Eurozone inflation in the form of CPI surged to 4% which was higher than the 3.9% consensus expectation. In fact, price declined below the significant 1.5764 support which is the violated upper trendline of the falling wedge price pattern we can see on the daily charts. It is very interesting to see how yet another significant daily price pattern has failed.

Today we have UK PMI, Eurozone PMI and Eurozone Unemployment with US ISM and Construction Spending thrown in the mix. With the ECB deciding on Interest rates and US Unemployment on Thursday, we can expect a volatile week ahead, especially now that Trichet is more concerned about inflation than anything else.. (rate hike? hint hint)

Herewith the Probability Studies for Today:

EUR/USD - No Trade Zone. On the 1 hour chart we can see a head and shoulders pattern which signals bearishness but it is still in the developing stage. If price stays below the 1.5764 support (violated wedge upper resistance line) then we will have a possible bearish probability. Any new-found bullishness from a market rhythm perspective will definitely give us a bullish perspective once again. At this stage we stand back and wait for the break..

GBP/USD - No Trade Zone within a Bullish Probability. As soon as price moves above the 1.9965 high of yesterday we will see a continuation of the previous bullish trading condition and we will also then adjust the 60minute trend to reflect the low of 1.9931. The low of 1.9877 has to be taken out if we want to see a bearish probability. In a nutshell, the Cable is consolidating between the latter mentioned levels and therefore the no trade zone

USD/CHF - No Trade Zone. The more active bearish 60minute trend we identified yesterday has been violated to the upside and we have a brief no trade zone on our hands. Price found significant resistance at the violated bullish Major Trend support (red line which is now resistance) and if price continues to take out new lows, we will adjust the 60minute trend to reflect the high of 1.0225 and a new bearish trading condition will then present itself

USD/JPY - No Trade Zone. The bearish 60minute trend has been violated to the upside as price bounced on the new Major Trend Support (red line) and the violation is in the process of being confirmed. Keep and eye out for the important 105.00 level as it resembles a confluence of previous and current support levels. Any new higher troughs on the 1 hour chart will give us a new bullish 60minute trend and a bullish probability but nothing is confirmed as yet and if the current bearish movement we are seeing now is sustained, we will be forced to adjust the 60minute trend by honoring the recent 106.38 high which will place the JPY in a bearish trading condition once again

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