Global markets ended last week on a mixed note rattled by uncertainty over the next moves of central banks. Overall, global markets continue to face uncertainty over the direction of interest rates, which are likely to lead the volatility in the near term.
This week the economic calendar will bring investors the US August CPI inflation data, PPI and retail sales numbers. The main event on the calendar for monetary policy this week is the meeting of the European Central Bank on Thursday. The European Central Bank (ECB) is anticipated to maintain its interest rates at the current level of 4.25% in this week's meeting. One of the other main attractions for this week is Apple's 'Wonderlust event'. iPhone 15, Apple Watch Series 9 and more are expected to be unveiled!
On the earnings front, the companies scheduled to release their last quarter financial results this week will be Oracle, Adobe and Lennar.
Gold price reversed from the 4-week high and ended with a notable loss last week. The bearish sentiment was fueled last week after the August US ISM services PMI unexpectedly came hotter than forecast, which raised market hopes that the Fed will need to continue raising interest rates. The metal could continue to struggle this week as well and the strengthening US dollar continued to sap demand for gold. This week, gold trader's focus will turn to the US CPI report on Wednesday and the retail sales data on Thursday.
This week, the metal needs to stay above 1938 to have a chance to develop upside momentum in the near term. On the downside, the decline is more extensive, and it will be hard to rule out a run towards $1900 and $1892 if the metal breaks below $1910. The expected trading range for the metal this week is between $1890 support and $1935 resistance.
The price action of the US Dollar Index, which measures the greenback’s value against the basket of six major currencies remained volatile and traded with a bid tone for the entire last week. For Dollar this week, important economic news to watch includes US CPI inflation data on Wednesday, and the US retail sales and PPI figures on Thursday. Consumer Price Index (CPI) report is bound to act as a crucial factor determining whether or not the US Fed will decide to raise interest rates one final time this year.
From a technical perspective, as long as the price holds above the 105 level, DXY could see a resumption of the upside move. While considering the strong bullish momentum the index may find strong resistance above 105.60 this week. On the downside, good support is expected at the 104.60 area, with this zone having held last week while further down, demand is also expected around 104, which will act as the next area of support.
EURUSD tumbled below to 1.0700 psychological level last week, it feels like bears have won the battle in recent days. The currency pair has been moving lower since mid-July, largely due to a broad strengthening in the US dollar. For the euro this week is expected to be a very busy one, the European Central Bank is headed for a crunch rate decision especially after the latest economic data showed that German headline inflation dropped to the lowest level since March 2022.
This week, last week's low at 1.0690 is the immediate support level, followed by 1.0660. If the pair breaks and closes below 1.0660 the slump will quickly extend toward the 1.0640/30 mark. On the other upper side, the immediate resistance is at 1.0750 then the key resistance level to watch is 1.0810.
Dow Jones recovered from early weekly losses and ended slightly higher on Friday as Federal Reserve policymakers suggested that the central bank will not raise interest rates further in the September monetary policy meeting. New York Fed Bank President John Williams said there is no urgency for an interest-rate increase this month as inflation is falling and the economy is better balanced. However, the overall momentum is expected to remain mixed this week as well because the investors remain worried as there is no clear timeline about when rate hikes are likely to end. This week, Dow investors primarily focused on the US inflation data and Apple’s annual event.
Technically the overall momentum remains mixed and the initial bias remains neutral for the upcoming week. The immediate resistance is located for the dow around 34,750 a break above this level will confirm a possible move to 35,000/100. On the downside, the immediate support will be the same as last week's low near 34,250, below which the slide could further get extended towards 34,050 and then 34,000/33,850.
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