In the US yesterday, headline Retail Sales fell but ax-auto sales suprized the market by gaining 0.5% versus 0.2%. The CPI was released in the UK and followed in the footsteps of the UK PPI figure which posted a surprize gain. Nevertheless, the upsurge we saw after the CPI was released was not sustained and the GBP pulled back and even took out a few lows.

Bernanke also said yesterday that markets are “far from normal” and therefore the FED is still wary about the economic conditions.

Today the BoE will release their inflation report and it may point to further rate cuts and therefore the Dovish tone from them might gain significance once again. In the US session we have the CPI figure. The CPI will definitely have a significant impact on the Greenback and if the figure is higher than consensus, we could see the Dollar strengthen across the board

Herewith the Probability Studies for today:

EUR/USD – Bullish Trading Condition. The 60minute trend support line has been adjusted to reflect the most active underlying trend. The hourly indicators are bullish as well, therefore the bullish trading condition. Keep a close eye on the resistance at 1.5470 (yesterday’s 60minute support) and 1.5430/40. Should the latter be violated to the downside the current bullish probability will be no more

USD/JPY – No Trade Zone. The violated Current Trend Support line (seen on the 4hour chart below) has been violated and the violation is now in the process of being confirmed. As soon as the bullish 60minute trend is violated to the downside and the indicators cross bearish, we will have a suitable bearish trading condition on our hands. On the other hand, there is still a risk that price can move BACK INTO the violated Current Trend Channel. Should the latter materialise and price trends above 105.35, the bearish bias will be no more

GBP/USD – No Trade Zone within a Bearish Probability. Yes, we have a bearish 60minute trend but No, the indicators are bullish and of top of that, price is consolidating. Therefore we would stand back on the Cable until the BoE inflation report is released. A indication of further cuts can send the GBP lower which is the underlying direction of highest probability

USD/CHF – No Trade Zone within a Bullish Probability. The previous bearish 60minute trend has been violated to the upside and hence the new bullish one we see today. As soon as market rhythm starts to trend higher, the hourly indicators will follow and then only the CHF will be situated within a suitable trading condition.

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