Trading Week Ahead: Will Inflation Data Push the Fed to Act?

This week, traders face high stakes as CPI and PPI data from the US and China hit the market. With ongoing trade tensions and inflation fears, investors seek clarity. Will the numbers spark recession worries or confirm economic resilience?

• FOMC Meeting Minutes Limited Market Impact Expected
The Federal Reserve will release minutes from its March meeting. However, since the meeting occurred before Trump’s latest tariff announcements, it may provide little new insight. Instead, traders will likely focus on fresh CPI and PPI data to gauge inflation trends and anticipate Fed actions.

• US CPI and PPI Reports Key Indicators for Fed Action
The US Labor Department plans to release March CPI, expected to hold steady at 0.2%, along with PPI data that could reveal mounting inflation pressures. Tariffs are intensifying inflation risks, forcing the Fed to balance economic growth with price stability. Traders will pay close attention to these reports for clues about future rate decisions.

• China’s CPI and PPI
Tariff impact under scrutiny investors will closely watch China’s inflation data to assess the real impact of US tariffs. Elevated inflation could signal deeper economic damage from the trade war, shaping global market sentiment.

*All times in the table are in GMT+2

Technical Analysis with FVG Strategy

This technical analysis uses the EMA 20 and EMA 50 to determine market trends, alongside the Fair Value Gap (FVG), which refers to price imbalances caused by aggressive movements, signalling key entry and exit points. This strategy applies to EURUSD, GBPJPY, US30, and XAUUSD, providing insights into both last week’s market opportunities and the current one.

Last Week’s Opportunities

XAUUSD

Market Context: After reaching a new all-time high, the gold price dropped into FVG support zones. Despite the economic backdrop, the bullish trend remains intact. Corrections are typical within bull markets, and a positive reaction at support levels could lead to another push towards new all-time highs.

Bullish Scenario (Preferred): If buyers successfully defend the support levels, gold may continue its bullish trajectory towards new highs.

Bearish Scenario (Alternative): If the market closes below the identified support levels and falls beneath both the 20 EMA and 50 EMA, this may indicate a structural shift to a bearish trend.

Setup: No valid FVG setups were identified this week. The previous week's long setup failed due to recent volatility.

Opportunities to Watch This Week

GBPJPY

Market Context: GBPJPY is currently trading below both the 20 EMA and 50 EMA, indicating bearish dominance. On Friday, the market broke the support level at 191.20, confirming a short structure.

Bearish Scenario (Preferred): A short FVG setup formed on Friday, with a potential target extending towards the untested swing low. The 188.75 support level may trigger a sharp reaction.

Bullish Scenario (Alternative): If the price strongly reacts to the 188.75 support, a reversal towards the nearest resistance at 193.66 could be possible.

Setup: A valid short FVG setup was identified this week.

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US30

Market Context: Following a significant correction, US30 is currently trading below the 20 EMA and 50 EMA, indicating strong selling pressure. On Friday, the market swept out swing lows and closed below critical support levels.

Bearish Scenario (Preferred): A short FVG setup formed on Friday, with a potential 1:2 reward-to-risk ratio. The prevailing bearish sentiment suggests further downside is likely.

Bullish Scenario (Alternative): During sharp corrections, quick upward moves are possible. A strong recovery could lead to a liquidity grab targeting previous swing highs (marked in yellow circles).

Setup: A valid short FVG setup was identified this week, presenting a viable bearish trading opportunity.

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EURUSD

Market Context: Since the previous Monday, EURUSD has been in an accumulation phase following a sharp price rally. Last Thursday, strong buying momentum encountered resistance at 1.1143, triggering a sharp rejection. The key support levels to watch are 1.0601 and the 1.0471 to 1.0387 range.

Bullish Scenario (Preferred): If the price continues to trade below the resistance level of 1.1143 and breaks below the support levels, a deeper correction could follow, confirming a bearish shift.

Bearish Scenario (Alternative): If buyers regain control and the price breaks above 1.1143, it could resume its bullish momentum, potentially targeting previous highs and initiating a liquidity grab.

Setup: No valid FVG setups were identified this or last week.

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