Forex News and Events: After a dreadful week for EURUSD and risk as a whole, there may finally be some light at the end of the tunnel. The frenzy of panic surrounding the Goldman Sachs lawsuits appears to have lost some of its bite in subsequent commentary and analysis, and this morning's data out of the Eurozone has been far more appetizing reading than re-hashed concerns about Greece. April ZEW Survey results revealed a much better than expected improvement in the current situation in Germany to -39.2 from -51.9 last (-48.0 expected), and economic sentiment in the Eurozone as a whole also surged to 46.0 from 37.9. In other news, UK CPI jumped yet again in March, gaining 0.6% MoM, 3.4% YoY - the third straight month that the annualized rate has been a percent above target. Indeed the upturn in inflation again this month may undermine the BoE's forecasts that CPI will fall back sharply in the coming months, a scenario that might prompt tightening far sooner than markets have priced in. The Riksbank earlier kept rates on hold at 0.25%, but SEK benefitted from an upgrade to 2011 GDP forecasts, and the new clarity that a first hike was anticipated in summer or early autumn. Coming up, the BoC rate decision is also anticipated to produce an on-hold decision (rates currently 0.25%), but once again, this is one of the central banks who look most likely to shift to a tightening bias in the near term so much focus will be on the accompanying statement. The last time around there was a noticeable shift away from discussing downside risks, so we look for further CAD strength as this shifts to a more hawkish stance in the coming months.

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Today's Key Issues (time in GMT): 13:00 CAD BoC rate decision, % exp: 0.25 prev: 0.25

The Risk Today: EurUsd As the immediate wave of risk aversion post-Goldman subsides and the volcanic ash begins to ease its grip on European airspace, EURUSD has managed to rebound somewhat from yesterday's 1.3416 lows, and is now flirting with the 1.3485 fibonacci level (61.8% of 1.2457-1.5145). We feel there is definitely some bullish bias building considering that the 3-week uptrend channel has remained intact throughout the last week's negative headlines, and that yesterday's price action carved out a hammer candlestick on the daily chart. The next important level to clear on the topside will be the overnight highs of 1.3500; which if conquered would open up up another visit to 1.3590, and send us back on our way to the middle of the road in terms of our uptrend channel. This bullish bias is however totally contingent on the uptrend channel remaining intact, and today that trendline support is expected around 1.3410. Below that trendline we once again monitor the former supports at 1.3385 and the back side of the former downtrend at 1.3350 before the major support at 1.3268 (not seen since 25 March).

GbpUsd GBPUSD continues to be very choppy as UK polls regarding the upcoming election once again cast uncertainty over the future of the economy. Although this morning we have seen a strong rebound rally from GBPUSD after yet another uncomfortably large gain in CPI, the breach of the 3-week uptrend yesterday does give us some cause to be more reserved about long entry. Obviously the bullish tone of EURUSD this morning does look to be supportive of GBPUSD, the support levels below are a bit further away than we would like to risk our money on. Next levels on the downside are today's low of 1.5284, then the uptrend which now comes in at 1.5255 -but the previous breach does temper our expectations that many bids will be apparent there. Choppy price action in the past week means there's a lot of cluttered resistance above, but first major level is 1.5525 highs from 15 April.

UsdJpy Despite a worrying moment yesterday which looked to have breached the back side of the major 3-year downtrend, USDJPY has powered higher ever since, and is now near to threatening the upper edge of the 2-3 week downtrend around 93.05. This emphatic reaction to the back side of the former downtrend is extremely encouraging for the USDJPY bulls, and we would now look to add longs on a break above the short-term down trend. On the topside, the next real resistance level to be wary of is 93.77 before the 4 April highs of 94.79. Now look for bids below to come in at 92.15 pivot level, and the back side of the major downtrend at 91.70.

UsdChf Still a rangebound pair for now/ The next resistance levels above come in just above yesterday's highs at 1.0700, then 1.0750 (25 March highs), then 1.0810 levels last seen at the beginning of March. Our medium term bias remains neutral until we see price developments take a more directional turn, and really to confirm a new trend we would like to see either a break above the 1.0900 major resistance, or a break below the 1.0435 lows from 1 April.

Resistance and Support:

EURUSD
GBPUSD
USDJPY
USDCHF

1.3692
1.5700
97.78
1.0900

1.3590
1.5600
94.82
1.0810

1.3568
1.5525
93.77
1.0750

1.3500
1.5415
92.85
1.0620

1.3400
1.5130
91.09
1.5000

1.3370
1.5000
89.50
1.0434

1.3300
1.4855
89.00
1.0400

S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot