Week Ahead in FX (September 26 – 30): Central Bank Rhetoric, U.S. Inflation Back in Focus

The spotlight is still on monetary policy, as several central bankers are scheduled to give speeches.

Oh, and the Fed’s preferred inflation measure is due, too!

What are market watchers expecting for these top-tier catalysts?

Before that, ICYMI, I’ve written a quick recap of the market themes that pushed currency pairs around last week. Check it!

And now for the closely-watched potential market movers this week:

Major Economic Events:

Eurozone CPI flash estimates (Sept. 30, 9:00 am GMT) – Can the ECB follow through on its tightening moves?

The upcoming release of the eurozone’s inflation estimates could determine whether or not another rate hike is in the cards.

Analysts are expecting another pickup in price pressures, with the flash headline CPI slated to accelerate from 9.1% to 9.7% and the core figure to tick higher from 4.3% to 4.7% this month.

Stronger than expected results might even up the pressure on the ECB to announce a bigger hike next time!

U.S. core PCE price index (Sept. 30, 12:30 pm GMT) – Although the Fed just recently made their monetary policy decision, this preferred inflation measure might still bring some volatility for the dollar.

Another increase in price levels is eyed, with number crunchers projecting a climb from 0.1% to 0.5%. Weaker than expected data, however, could mean some profit-taking on the dollar’s rallies lately.

Central bankers speeches –  After last week’s busy run with FOUR major central bank decisions, traders could stay on the lookout for monetary policy clues from these upcoming speeches.

Better mark your calendars, people!

• BOJ Governor Kuroda’s speech during a meeting with business leaders in Osaka (Sept. 26)
• ECB head Lagarde‘s testimony before the Committee on Economic and Monetary Affairs  (Sept. 26, 1:00 pm GMT) and participation in a fireside chat at the Frankfurt Forum on US-European GeoEconomics (Sept. 28, 7:15 am GMT)
• Fed Chairperson Powell‘s panel discussion about digital currencies in Paris (Sept. 27, 11:30 am GMT)
• SNB Governing Board Member Maechler’s speech (Sept. 29, 11:45 am GMT)
• RBNZ Governor Orr’s participation in a panel discussion on central bank independence (Sept. 29, 1:00 pm GMT)

Forex Setup of the Week: USD/CHF

This pair has been moving sideways for the past couple of months, finding support at the .9500 handle and resistance around .9850.

Another test of the ceiling seems to be taking place, so will the top of the range keep gains in check?

Technical indicators are giving mixed signals at the moment, as the 100 SMA is above the 200 SMA to suggest a potential bullish breakout.

If that happens, the pair might be in for a rally that’s the same height as the rectangle. That’d be roughly 350 pips yo!

On the other hand, Stochastic is approaching the overbought region to suggest that buyers really need to take a break soon. Turning lower would confirm that sellers are back in the game, possibly taking USD/CHF back down to the range support.

Just stay on the lookout for Fed officials’ speeches and any changes in risk sentiment when trading this one!