Breakfast Blog

Good Morning Traders,
                                     A lively week so far in the Markets, which has seen Europe adopt the "bad news is good" policy towards its Equity Markets. Poor German Manufacturing and Services Data was followed by a weak IFO Business Climate report Yesterday, which surely should have been negative for the Euro and for all European indexes, but instead we got a massive rally on the hope that the ECB will provide more accomodative policy and either cut interest rates or provide some sort of quantitative easing program to support the single currency. As I type now the German Dax is 350 points higher then it was this time on Tuesday Morning, with the Spanish Ibex and the Italian FTSE MIB realising similar gains.
The ECB's monthly meeting is next Thursday and the chance of a rate cut this soon is quite unlikely with only a handful of analysts predicting the cut to come next week, a more likely scenario would be a cut at the June meeting which would give the ECB time to analyse the Economic data before making a decision. I would expect some very dovish rhetoric from Mario Draghi next Thursday which may in itself help reduce the Exchange rate of the currency even though they claim this is not a mandate for them.
American Data has been very soft this week and is also helping to support EURUSD price action, this is also helping to support the American Equity Indexes aswell because with bad news they have the promise of never ending Quantitiative Easing. Today we see the release of the weekly Initial Jobless claims, which is the only tier 1 data from the States today with tomorrow's big Q1 GDP number on every traders mind.
Some good levels to look out for in the EURUSD pair is 1.3080 topside as a big resistance level and 1.30 downside. Looking at the S&P 500, 1576 is a previous high and there is not much in the from of resistance now until 1600, so any bullish data may see the market return to this level quickly.
Best of luck in the Markets.