We have quite a few US economic reports rolling out tomorrow - most notably the US Consumer Price Index reports. I decided to avoid all of that because of the extreme volatility that is potentially created by that report. With inflation being one of the main themes in the US, I believe a lot of traders were on the sidelines waiting for this one all week. You could potentially grab quite a few pips from this report, but market slippage is too much of a risk for my blood. I will watch what happens and try to catch a trend if one forms after the report is released.

But for tomorrow's pick, I chose to play a potential breakout opportunity in EUR/JPY. This pair is currently in consolidation mode as it waits for two potentially market moving events: Eurozone CPI at 5:00 am EST and the G-7 meeting this weekend. I think we will see volatility as inflation is also a concern in the Eurozone, but I think it will be less risky than playing the US CPI report. We will still have a tight stop, and go for around 1:1 risk/reward ratio because of the lower potential of volatility.

• Short EUR/JPY at 149.30, stop at 149.55, pt1 at 149.10, pt2 at 148.70
• Long EUR/JPY at 150.00, stop at 149.75, pt1 at 150.20, pt2 at 150.70