Today’s big event and potential market shaker will be the latest US inflation data which could offer fresh insight into the Federal Reserve’s next move.

As the countdown to the April CPI report enters its final hours, here are a selection of technical setups to keep an eye on.

Dollar Index trapped within range

Asian markets were a mixed bag on Tuesday as caution kicked in ahead of tomorrow’s key US inflation report, although Chinese shares rose after export data beat market expectations. European futures are pointing to a positive open despite the mixed sentiment, with UK financial markets reopening after a public holiday. In the currency arena, the dollar has entered standby mode ahead of talks between US President Joe Biden and congressional leaders on the debt-ceiling issue.

The GBPUSD hijacked our attention this morning after hitting a fresh 2023 high.

Sterling has become the best performing G10 currency year-to-date, gaining roughly 4.7% against the dollar thanks to fundamental and technical forces.

Even as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.

All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.

Monday, May 8

European shares flashed red on Thursday as investors digested the latest rate hike by the Federal Reserve (Fed) and prepared for the European Central Bank’s (ECB) policy decision later today.

Our focus this morning falls on the STOX50 Index which could be influenced by the ECB rate decision.

Oil markets have been plunged into a bloodbath over the past 24 hours.

The global commodity shed almost 3% this morning, extending a 5% drop on Tuesday after disappointing US economic data fuelled fears of a recession. With oil bears drawing ample strength from weak US factory data and renewed concerns about the US banking sector, further downside could be on the cards ahead of the Fed decision later today.

Asian equities were mixed on Tuesday with some markets closed as investors braced for a heavy event week packed with top-tier data releases and key central bank meetings. European futures are signalling a mixed open with market players awaiting the start of the Fed meeting and rate decision on Wednesday. In the currency space, the dollar edged lower while AUD surged after the Reserve Bank of Australia (RBA) unexpectedly raised interest rates.

Spot gold has been trapped within a $46 range for the most part since April 17th.

Though finding support around the upper-$1900 levels over the past two weeks, the precious metal can scarcely keep its head above the psychologically-important $2,000 line.

If you thought the last few days were wild for financial markets, then wait until you see what’s in store for the week ahead…

Investors will be served a generous platter of risk investors ranging from pivotal major central bank meetings in the shape of the Reserve Bank of Australia (RBA), Federal Reserve (Fed), and European Central Bank (ECB).

It has certainly been a busy week for global financial markets thanks key economic data and earnings from some of the largest companies in the world.