US inflation data was the key event last week; according to the Bureau of Labour Statistics (BLS), headline (all items) consumer price inflation incre
The most important central banks, of course, will be the Fed and theKicking things off will be the FOMC rate decision on Wednesday at 6 pm GMT; economists and markets widely expect the Fed to hold the line at the current Fed Funds target range .
The quarterly FOMC projections and the dot-plot will accompany this meeting, which, given the market pricing a no-change, will be what most market participants monitor. It is unlikely that the Fed’s so-called dot-plot will change by much at this meeting, meaning the Fed will perhaps leave the additional rate hike on the table for this year, particularly in light of recent inflation numbers and the resilience in the US economy. Many desks claim this will be a ‘hawkish hold’, thus leaving the door ajar for further policy firming if necessary. It will also be interesting to see how many rate cuts are forecasted for 2024, as well as the updatedThe US dollar, therefore, will be widely watched this week; according to the US Dollar Index, we ended a ninth week in positive territory, up +0.3%. The buck is in an interesting position right now, benefitting from resilient economic conditions, attractive yield and safe-haven demand, hence its continued outperformance of late. Thursday welcomes the SNB and the BoE at 7:30 am and 11:00 am GMT, respectively. Both central banks are expected to raise rates by 25bps this week. Should the BoE press forward with another rate hike, the vote will be interesting to watch and may be split. As a result, this may see an upside spike in the GBP on the back of the rate hike, but it will likely be short-lived, particularly if there’s less commitment from the MPC members in the vote. Also, out of the UK—a day ahead of the BoE rate decision—we’ll receive the latest UK inflation numbers for August, which, as of writing, the median estimate shows that year-on-year headline inflation is expected to rise to 7.1% , with core inflation for the same period estimated to ease slightly to 6.8%, down from 6.9%. finished another week underwater against the US dollar last week and is poised to shake hands with key weekly support from $1.2331.policy decision at 3 am GMT, which is anticipated to hold pat on rates; therefore, it is doubtful we’ll see much here. We also will see the eurozone, UK and US global manufacturing and services PMIs later Friday, all of which remain in contractionary territory across the board and are projected to remain so for September’s release.The dollar is proving relentless. Up +0.3% on the week, this marks the greenback’s ninth consecutive weekly gain. Technically, however, this is not a surprise. The monthly timeframe’s long-term trend has been north since mid-2008, and the Q4 correction has likely been viewed as a dip-buying opportunity from monthly support at 99.67, as noted in previous research. With USD bulls remaining on the offensive now—the monthly timeframe exhibits scope to approach resistance as far north as 109.33—and the daily timeframe making its way above resistance at 105.04 in the second half of last week, additional outperformance could be seen this week, targeting daily resistance at 105.76. While the trend on both the monthly and daily timeframes supports higher prices this week, as does the Relative Strength Index on the monthly timeframe , the daily timeframe’s RSI is displaying signs of negative divergence at overbought levels. Therefore, although higher levels are on the table this week, a correction to retest daily support from 105.04 is not out of the question .I touched on this currency pair last week and noted the following on the monthly timeframe: Longer-term price action on the monthly timeframe rejected a key area of resistance in July at $1.1233, a base accompanied by the 50-month simple moving average at $1.1164. Subsequent flow observed selling in August, followed by the beginning of September also echoing a bearish tone, down -1.7% MTD. You will note that the trend on the monthly scale has been lower since 2008, emphasising the pullback from the $0.9536 low and the recent rejection of $1.1233 resistance appears to have been enough to attract a sell-on-rally theme in the longer term. The test for sellers will come at monthly support from $1.0516; clearance of this level would help corroborate a downside bias and likely encourage follow-through selling. The monthly chart’s downside bias was recently aided by price action on the daily timeframe, crossing through bids at support from $1.0689 and unearthing the monthly support level highlighted above at $1.0516. Ultimately, technicians will likely be anticipating $1.0689 to hold as resistance this week. Meanwhile, across the page on the H1 chart, Friday completed an AB=CD bearish formation at $1.0682 just south of the current daily resistance, accompanied by a H1 1.618% Fibonacci extension ratio at $1.0683. Assuming the H1 bearish formation holds steady at the underside of daily resistance, this could prompt further selling this week, zeroing in on Thursday’s lows around $1.0632, closely followed by the $1.06 handle and then H1 support coming in at $1.0572.Against the US dollar, sterling ended another week on the ropes, down -0.7% and on track to touch gloves with weekly support at $1.2331 this week. The longer-term trend based on the weekly timeframe shows current action is establishing a correction in a market trending higher since the currency pair touched a record low of $1.1156 in September 2022. With room for sellers to remain in control for the time being on the weekly timeframe , price action on the daily timeframe, as you can see, manoeuvred beneath the 200-day simple moving average at $1.2431 on Thursday and retested the lower side of the dynamic value on Friday as resistance. Having seen the daily timeframe’s trend exhibiting a downward bias , the next support calling for attention on the daily scale is $1.2272, located a touch south of the weekly support highlighted above at 1.2331. Analysis of the H1 timeframe reveals buyers and sellers ended the week rejecting the underside of the $1.24 psychological level. This followed an earlier rejection of resistance at $1.2438 during the early hours of London on Friday. Given that the weekly and daily timeframes demonstrate that the bears will likely remain in the driving seat for now, downside risks remain for the currency pair this week, targeting the weekly support at $1.2331, closely shadowed by H1 support at $1.2325.Closing higher for a fourth consecutive week after rebounding from weekly support at $219.86 , Tesla added more than 10.0% last week. The recent advance has landed the stock within striking distance of weekly trendline resistance, taken from the high of $414.50. In view of the lacklustre response from the last rejection of trendline resistance , a break of this level is potentially in the air this week, a move that would help confirm this year’s uptrend from lows of $101.81. The caveat, of course, is that the breach may be short-lived should weekly resistance stand firm at $286.92. From the daily timeframe, Friday’s retest of resistance-turned-support at $272.58 is an encouraging sign for current buyers in this market. Technically, should theremain north of $272.58, drawing higher this week could be seen toward resistance at $284.25, situated near weekly resistance highlighted above at $286.92, which, by extension, implies a break of the weekly timeframe’s trendline resistance. So, to sum up, chart studies imply a bullish push in the short to medium term until the $285.00ish region, at which point we could see sellers step in and take advantage of the buy-stops tripped north of weekly trendline resistance.
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