Lots of tension ahead of this week’s Fed decision

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The latest push to a fresh 2024 high beyond 1.2830 confirms the outlook and opens the door for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should now be well supported ahead of 1.2500.

• R2 1.3000 – Psychological – Strong
• R1 1.2894 – 8 March/2024 high – Medium
• S1 1.2723 – 7 March low – Medium
• S2 1.2649 – 4 March low – Medium

GBPUSD – fundamental overview

The Pound was sold into the end of last week after a quarterly BOE poll showed year ahead inflation expectations down to 3% from 3.3% previous, the lowest since August 2021. Meanwhile, broad based US Dollar demand on strong US data also weighed on the Pound. Key standouts on Monday’s calendar come from Eurozone trade, Eurozone CPI, and Canada producer prices.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 145.90, with only a weekly close below to delay the constructive outlook.

• R2 150.89 – 13 February/2024 high – Strong
• R1 149.33 – 18 March high – Medium
• S1 148.03 – 15 March low – Medium
• S2 146.48 – 8 March low – Strong

USDJPY – fundamental overview

Last week's Jiji news report that the BOJ is arranging to end its negative interest rate policy at this week's meeting has fallen on deaf ears, with the market tired of hearing things that never actually end up playing. Instead, it's back to selling Yen and buying US Dollars on the back of the latest wave of strong US data and hot inflation reads. Key standouts on Monday’s calendar come from Eurozone trade, Eurozone CPI, and Canada producer prices.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6691– 4 December high – Strong
• R2 0.6668 – 8 March high – Medium
• S1 0.6535– 4 March high – Medium
• S2 0.6500 – Psychological – Medium

AUDUSD – fundamental overview

The Australian Dollar is getting a little boost from the slightly better than expected Chinese retail sales data. The focus now turns to tomorrow's RBA decision, with the market pricing a rate hold but leaning more towards the side of expecting a more dovish leaning central bank. Key standouts on Monday’s calendar come from Eurozone trade, Eurozone CPI, and Canada producer prices.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3607 – 28 February/2024 high – Strong
• R1 1.3552 – 15 March high – Medium
• S1 1.3420 – 8 March low – Medium
• S2 1.3358 – 31 January low – Strong

USDCAD – fundamental overview

Strong Canada housing starts and surging oil helped to offset some of the Canadian Dollar weakness from impressive US data and hotter US inflation reads. Key standouts on Monday’s calendar come from Eurozone trade, Eurozone CPI, and Canada producer prices.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6223 – 4 December high– Strong
• R1 0.6218 – 22 February high – Medium
• S1 0.6069 – 6 March low– Medium
• S2 0.6038 – 5 February/2024 low – Strong

NZDUSD – fundamental overview

We're seeing some demand for the New Zealand Dollar as the week gets going on the back of upbeat New Zealand business PSI data and slightly better than forecast China retail sales. Key standouts on Monday’s calendar come from Eurozone trade, Eurozone CPI, and Canada producer prices.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended after pushing to fresh record highs, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close above 5100 will be required to delay the outlook. Next key support comes in at 4842.

• R2 5200 – Figure – Strong
• R1 5189 – 8 March high/Record – Medium
• S1 4920– 13 February low – Strong
• S2 4842 – 31 January low – Medium

US SPX 500 – fundamental overview

Though we have seen an adjustment of investor expectations towards the amount of rate cuts in 2024, the market still believes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid and pushing record highs. Still, it's important to highlight the fact that the Fed has yet to declare a victory over inflation and could disappoint investors with less accommodative policy than desired going forward. If this happens, stocks could be in for a nasty bearish reversal.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

• R2 2200 – Round Number – Medium
• R1 2196 – 8 March/Record high – Medium
• S1 2110 – 5 March low – Medium
• S2 2079 – 4 March low – Medium

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an end.