Strap yourselves in for another hectic week of major monetary policy announcements. It is the crucial meeting of the FOMC this week. After the hot US CPI print, could the hike be as big as 100 basis points? We are also on the lookout for several other major central bank decisions too. Watch for the People’s Bank of China (PBoC), the Bank of Japan (BoJ), the Swiss National Bank (SNB) and the delayed Bank of England (BoE) decision. We are expecting to see further rate hikes from the SNB and the BoE., but the question is, how big? 

Watch for: 

  • North America – US housing data, Canadian inflation, the Fed and flash PMIs
  • Europe – The SNB, the BoE and the flash PMIs.
  • Asia – Japanese core CPI, the PBoC and the BoJ
  • LatAm – The Brazilian Central Bank interest rates and 1st half month Mexican inflation

North America

N.B. Forecasts are the latest available consensus 

US dollar (USD)

The USD was boosted once more versus major forex last week by the higher-than-expected core and headline US CPI inflation. Suddenly the chat was not just of 75 basis points (bps), but 100bps would be on the table. The consensus is still looking for 75bps but it could be a hawkish 75bps. We will also be watching for the dot plots and where Fed members see the peak in rates next year. Fed funds futures currently sit at a peak of around 4.4% in March 2023. Elevated volatility is assured, but we favour the USD to quickly find support even if there is any near-term weakness in the coming days. 

Canadian dollar (CAD)

After the recent Bank of Canada decision which left CAD traders fairly disappointed, the emphasis will be on inflation this week. US inflation came in above expectations, so the forecast drop in Canadian inflation will be closely watched. An upside surprise should help to support CAD positions.

  • USD/CAD – With the decisive strengthening of the USD we have seen USD/CAD breakout to levels not seen since November 2020. There is a slight feel of the move being near-term stretched and this may induce a near-term pullback. However, weakness towards 1.3075/1.3175 support would be a chance to buy.


Near-term rallies continue to falter on commodities. There has been a significant underperformance of Gold versus Silver in the past week. However, if silver hits the buffers, it could be at risk of some sizable corrective pressure. A hawkish Fed could be the catalyst.  

  • Brent Crude Oil – another rebound has failed with resistance at $93.25/$96.40. This is around old July/August lows (overhead supply) and the 21-day moving average. With corrective configuration on the momentum, we look to use intraday strength for another retest of the September low at $88.25.
  • Gold – The breakdown of huge support at $1680 may induce some sort of technical rally this week. How traders respond to this rally will be key. There is overhead supply at $1680/$1697 to restrict the rally and we look to sell into strength.
  • Silver – The market is tracking lower again within the four-month downtrend and near-term rallies remain a chance to sell this week. With the downside potential within the corrective configuration of momentum, we look for a retreat towards $18.25/$18.50.

Wall Street

Wall Street has been under pressure since the hot US inflation data last week. The risk is that a hawkish Fed drives another key risk-averse move on equity markets. With US markets close to some important supports this could be another key breakdown. 

  • S&P 500 futures – with downside pressure mounting and further downside potential, there is considerable risk of an acceleration lower on a close below 3883. We look to use near-term strength as a chance to sell. Resistance at 3980 is a near-term gauge now.
  • NASDAQ 100 futures – a downside break to two-month lows below the 11930 support opens the key June/July lows again. We look to use near-term strength as a chance to sell. Resistance at 12265 is an initial barrier.
  • Dow futures – A break below 30970 is a two-month low and has opened for the next leg lower. With downside potential in momentum indicators, we look to use near-term rallies as a chance to sell. Initial resistance is at 31385. 


N.B. Forecasts are the latest available consensus 

Euro (EUR)

The hawkish leanings of the ECB continue, but one of the key factors to watch in the coming days and weeks is how the ECB policy path is framed alongside the energy price caps. With this in mind, the Eurozone consumer confidence data will be watched. After a surprise pick-up last month (albeit from record lows). There have not been two consecutive months of improvement for 15 months. 

  • EUR/USD – the lack of downside traction (as has been seen in other pairs) hints at better performance from the EUR. Despite this though the outlook on EUR/USD remains negatively configured and we would continue to use any near-term weakness as a chance to sell for continued pressure on 0.9900/0.9950 support and the 0.9864 low. We favour selling bull failures under 1.0100.

British pound (GBP)

An unexpected fall in the headline UK CPI (due to lower fuel prices) would have been welcomed in the halls of the Bank of England. However, this does little to mitigate the growing wage pressures. This leaves the MPC with another tough decision in this week’s delayed monetary policy decision. The announcement of fiscal support for consumers and businesses with their energy bills could push a more aggressive tightening. A 75bp is possible but the consensus is sitting around 50bps. However further hikes in the months ahead could see rates at 3% or above by the year-end. 

  • GBP/USD – the downside break of 1.1405 (to a multi-decade low) underlines the weakness of GBP and the strength of the USD. We favour using any near-term strength as a chance to sell once more. We see any bull failures between 1.1470/1.1590 as an opportunity.


European indices remain under pressure on the deterioration in risk appetite in the wake of the hot US inflation data. Hawkish moves from major central banks this week could drive another leg lower.

  • DAX – tends to swing around, but last week’s bull failure again under the nine-month downtrend suggests ongoing pressure on the key support of recent months. Initially the September low at 12590 but we favour a test of 12375/12425 in due course. Initial resistance is 12950/13100 this week.
  • FTSE 100 – the outlook has been very choppy in recent weeks, swinging firstly higher and then lower. There is a mild negative bias to momentum, but we expect these swings to continue.


N.B. Forecasts are the latest available consensus 

Japanese yen (JPY)

The JPY remains the worst-performing major currency. The key question coming into the BoJ meeting is whether there will be some sort of intervention to alleviate the weakness of the currency. If there is, it leaves JPY open for a considerable short-squeeze rally.

  • USD/JPY – the pair have been in choppy consolidation since hitting a 21-year high of 144.99 A trading range around 141.50/145.00 has formed. We favour buying into weakness.
  • AUD/JPY – With JPY consolidating and AUD slipping, this has pulled AUD/JPY lower in the past week. The market is now testing a near-term support band of 95.30/95.75. With the daily RSI unwound to 50 this is an important week. Moving below 94.75 would open for a much deeper correction.

Australian dollar (AUD)

According to RBA Governor Lowe, the central bank is committed to getting inflation back down to the 2% to 3% target range, but they are not on a pre-set path. Lowe has said that at some point they will not need to hike by 50bps, and they are getting closer to that point. Rates are too low for now, but either 25bps or  50bps will be considered at the next meeting. This all amounts to a dovish lean taking hold at the RBA.

  • AUD/USD – reaction to the breakdown of the long-term support at 0.6680/0.6700 will be important this week. With the daily RSI in corrective configuration, we favour using near-term rallies as a chance to sell. We would see a bull failure under 0.6770 would be another sell signal.

New Zealand dollar (NZD)

With a lack of market-moving New Zealand data, the NZD will look towards the AUD to drive its moves this week.

  • NZD/USD – broke decisively below the 0.5995 support last week. We would now look to use any technical rallies that fall over around the 0.6000/0.6060 overhead supply as a chance to sell.


N.B. Forecasts are the latest available consensus 

Brazilian real (BRL)

With inflation starting finally fall back in recent months, the pressure is being relieved on the Brazilian Central Bank to hike. Hikes of +100bps earlier in 2022 have been tempered with +50bps hikes in the last two decisions. Whilst 14% is a possibility, could the central bank be about to sit on its hands? The real has been performing well versus Lat Am peers in recent weeks and has been only losing marginal ground versus the USD. 

  • USD/BRL – A strengthening USD is once more pulling the pair higher towards a test of the 5.2600/5.3200 resistance band. If the USD continues to strengthen on the FOMC decision this could drive a key upside break. Expect some volatility also around the Brazilian central bank decision.

Mexican peso (MXN)

Mexican Retail Sales are expected to fall by -0.5% in July and reduce year-on-year sales to 3.5% (although arguably that would be considered a reasonable number in light of the broad economic backdrop. The concern is though that inflation (and especially core inflation) is forecast to jump again. This will keep the pressure on the Mexican central bank to hike rates further.

USD/MXN –the near to medium-term outlook on USD/MXN remains mixed. With the USD strengthening once more this has bolstered the support of a month-long trading range. The support is at 19.750/19.850 and if the USD strengthens off the Fed this week a test of the resistance around 20.200/20.300 could be seen again.

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.