Investors will likely turn their attention towards the US CPI data released on Wednesday. Unlike in Europe, inflation has been surprisingly stubborn in the US in the past few months, and that has been limiting the Federal Reserve’s ability to start considering cutting rates. Whilst the resilience in the economic data has been keeping US equities supported, the lack of progress in the disinflation process has been causing domestic indices to lag their international peers.
Headline inflation is expected to drop marginally to 3.4% with core inflation expected to drop to 3.6% from 3.8%. Given the recent resilience in the data, any drop month-on-month is likely going to be welcomed by traders but the fact remains that inflationary pressures continue to weaken the Fed’s ability to unwind its restrictive monetary policy, which should start to show weakness in growth at some point, a headwind for equities.
The US 100 has been building marginal gains over the past few sessions but the bullish momentum is struggling to take hold. 18,250 seems like a short-term resistance for now but even if broken above this level, buyers are likely going to encounter further selling pressures heading towards the March highs at 18,465. The RSI will need to be able to break and hold above 60 in the coming days for the bias to remain bullish. A weaker-than-expected CPI reading could be the catalyst to push the US 100 to a new high this week.
Headline inflation is expected to drop marginally to 3.4% with core inflation expected to drop to 3.6% from 3.8%. Given the recent resilience in the data, any drop month-on-month is likely going to be welcomed by traders but the fact remains that inflationary pressures continue to weaken the Fed’s ability to unwind its restrictive monetary policy, which should start to show weakness in growth at some point, a headwind for equities.
The US 100 has been building marginal gains over the past few sessions but the bullish momentum is struggling to take hold. 18,250 seems like a short-term resistance for now but even if broken above this level, buyers are likely going to encounter further selling pressures heading towards the March highs at 18,465. The RSI will need to be able to break and hold above 60 in the coming days for the bias to remain bullish. A weaker-than-expected CPI reading could be the catalyst to push the US 100 to a new high this week.
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