Trading Week Ahead: Spotlight on US Inflation and Consumer Data

Traders are entering the new week with heightened attention on inflation indicators and the resilience of the US consumer. At the forefront is the US Consumer Price Index (CPI), which holds the potential to shift expectations around the Federal Reserve’s next policy moves. Alongside that, the Producer Price Index (PPI) and Retail Sales data will offer deeper insights into inflation pressures and household demand.

Expect heightened volatility across the US dollar, Treasury yields, and equities—here’s what to watch this week:

• US Consumer Price Index (CPI)
Markets anticipate a pickup in headline CPI to 0.3% month-on-month, up from 0.1% previously. A hotter-than-expected figure could push Fed rate cuts further out, likely boosting Treasury yields and the US dollar. On the other hand, a softer print might revive dovish sentiment and support risk assets, particularly equities.

• US Producer Price Index (PPI)
Often seen as a leading indicator for CPI, PPI will be under close scrutiny. An upside surprise may reinforce inflation concerns and strengthen the dollar. Conversely, a subdued result could amplify rate-cut hopes and ease policy pressure.

• US Retail Sales
After a steep decline of -0.9% in the prior release, Retail Sales are expected to rebound modestly to 0.2% m/m. A strong showing would reinforce the narrative of economic resilience and reduce the urgency for rate cuts. However, another disappointing print could stoke fears of consumer fatigue, potentially weighing on market sentiment.

*All times in the table are in GMT+2

Technical Analysis with FVG Strategy

This trading approach leverages the 20- and 50-period Exponential Moving Averages (EMAs) to assess the prevailing market trend, while the Fair Value Gap (FVG) is used to pinpoint zones of price inefficiency. These gaps, formed during sharp price movements, often highlight optimal entry or exit levels. The strategy is suitable for instruments like EURUSD, GBPJPY, US30, and XAUUSD and offers insights into recent price behaviour along with potential trade setups.

Weekly Market Outlook

EURUSD

Market Context: Price is testing a support area near an unfilled FVG and the 20 EMA. Momentum leans bearish.

Bearish Scenario (Preferred): A continuation lower could reach the next support level where value-seeking buyers may emerge.

Bullish Scenario (Alternative): A strong rebound from current levels might shift short-term sentiment toward retesting recent highs.

Setup: No valid FVG setup has formed recently; bearish bias holds.

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XAUUSD

Market Context: Gold bounced from the 50 EMA, gaining strength before stalling at resistance. The market is now at a decision point.

Bullish Scenario (Preferred): A confirmed breakout above resistance could open the path to the next swing high.

Bearish Scenario (Alternative): A failed breakout may pull the price back to the EMA cluster for another test.

Setup: No valid FVG signal; price remains in consolidation with a slight bullish lean.

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Last Week’s Opportunities

GBPJPY

Market Context: The pair continues to trade within a bullish ascending channel, supported by higher lows.

Bullish Scenario (Preferred): A valid FVG long setup from last week remains active, targeting a 2:1 RRR as price climbs.

Bearish Scenario (Alternative): A pullback to support could present a re-entry chance if the bullish structure remains intact.

Setup: A valid FVG long formed last week and is currently playing out. The trade remains active, with price respecting the bullish structure and approaching the target zone.

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US30

Market Context: The index rejected key resistance and triggered a bearish FVG setup, heading toward support.

Bearish Scenario (Preferred): Failure to hold current support could see price slide further, filling underlying liquidity gaps.

Bullish Scenario (Alternative): A rebound may invalidate the bearish bias and restore upward momentum.

Setup: The FVG short setup hit stop loss amid indecision; no active setup at present.

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