Global markets are heading into a bumper week of tier one economic releases, with the eagerly awaited rate decisions from the Federal Reserve, European Central Bank and Bank of Japan on the calendar. Also in the mix are key Inflation figures from the US , Europe and Australia to keep traders on their toes.

US: FOMC looks set to hike 25bp

US inflation has moved lower recently, but a tight jobs market and business activity remaining resilient, a 25 bp hike from the Fed is expected, with the market pricing it in as a 99%+ probability.

Source:CME Fedwatch tool

With a 25bp fully priced in it will be the signaling that will be the key to the market reaction with the accompanying statement and presser likely to acknowledge the encouraging signs on inflation, but also a determination not to take any chances that could allow it to re-ignite.

Chart to watch:

The US Dollar Index rebounded strongly last week, from extreme oversold levels, re-taking the major Support/Resistance (and psychological) level at 101.

101 will be the level to watch, a hold above and price action indicates it has reverted to Support could be the start of a leg higher in the USD, a break back below and 101 re-establishes as resistance and a re-test of the July lows will be a possibility.

Eurozone : ECB favoured to hike 25bp – future hikes hang in the balance

Like the FOMC decision, markets are currently pricing in a ECB rate hike of 25bp as almost a done deal, with futures showing a 92% + probability.

Source:Bloomberg terminal

Also, like the FOMC, signaling will be key to the market response after this decision, with another hike in September being teased by ECB members hanging in the balance. Flash PMI manufacturing and Services figures out of Germany and France on Monday could play a part in the ECB forward guidance, so EUR traders should keep an eye on those too.

Chart to watch:

EURUSD has had a stellar run up on the back of USD weakness since early July, breaking out of it’s range before stalling around the 1.12 key resistance level and pulling back last week.

1.12 will be the level to watch and has acted both as strong resistance and support in the last 12 months, a retake and hold of this level will be needed to see another leg up in EURUSD, whilst holding below would be a bearish signal and a test of the previous resistance at 1.1010 (also the 61.8% Fib retracement of latest up move) is certainly in play.

Australia: Market Split on next RBA move – Q2 CPI the decider?

The highlight for AUD traders this week will be the Q2 CPI reading on Wednesday. Which will go a long way to determine whether the RBA hikes rates again at their August meeting. With futures markets evenly split (pricing in a 48% chance of a 25bp hike) some big moves in AUD are likely on the release of this announcement.

Source: RBA rate tracker

Chart to Watch:

AUDUSD drifted lower last week, USD strength, though stronger than expected employment data did arrest the decline after AUDUSD found support at the 50% fib level at 0.6750, seeing a brief spike higher before resuming its drop on Friday.

Key level to watch is 0.6750, a 50% fib level from the recent run up in AUDUSD, and also a level that has acted as key Support/Resistance in the past. Another leg up to test the major resistance at 0.69 will need to see 0.6750 re-establish itself as support, the next major support level is around 0.6600.

Japan: BoJ meeting a close call, tweaks to YCC a possibility.

Recent swings in FX and Japanese government bonds are suggesting market participants positioning for a monetary policy adjustment out of the BoJ on Friday. Re-adjusting their target band for JGB’s is a definite possibility and will have some major ramifications for the JPY.

Chart to Watch:

USDJPY bounced last week after a precipitous drop from the 145 “intervention level” to extreme oversold levels recently, pushing above and holding the 50% retracement level.

If there is no change from the BoJ on Friday, a re-test of the 145 level is in the cards for the near future as carry traders resume their long positions. An adjustment should see a rapidly strengthening Yen, and a new down trend in USDJPY kick started.

In other economic announcements, another one to watch will be the Feds favoured inflation gauge, the core PCE Index released on Friday. Full calendar below: