Technical Analysis Of The FTSE 100 As It Recovers From Last Week's Low While GBP/USD And The Gold Price Slide Towards Support.

(MENAFN- DailyFX (IG)) Macro Update

Oil prices climb more than 3%: Fresh Houthi strikes on Saudi Arabia and Iranian attacks on Gulf shipping intensified supply concerns following the closure of the kingdom's East-West pipeline, which puts up to 4% of global oil supply at risk, sending Brent to $109 a barrel.

AI stocks tumble across Asia: Asian technology shares fell after the CEOs of Anthropic, OpenAI and xAI called for a slowdown in AI development to address potential threats to humanity, with SoftBank plunging as much as 13.2% and Kioxia falling 9.8% in Tokyo.

Fed hike firmly priced in: A hotter-than-expected US consumer price report on Friday pushed markets to price an 86% probability of a 25-basis-point rate increase on Wednesday, which would be the Fed's first hike since mid-2023.

BOJ tightening expected on Friday: Markets are pricing around a 76% chance that the Bank of Japan will raise its policy rate by 25 basis points to 1.25%, while the yen remains close to last week's seven-month high of ¥152.88 per dollar.

Treasury yields remain near multi-year highs: The 10-year Treasury yield held around 4.973% after two-year yields surged 26 basis points last week, weighing on equity valuations as the yield curve flattened.

Sterling slips ahead of Bank of England: The pound eased to $1.3486 ahead of Thursday's policy decision, with rates expected to remain at 3.75%, although policymakers could once again deliver a split vote.

FTSE 100 probes key resistance

The FTSE 100's drop through its late August and early September lows at 10,686 took it to last week's 10,583 low before regaining some lost ground. Because of inverse polarity the 10,686 level now acts as resistance and is part of a wider resistance band all the way up to the early July 10,745 high. This area we expect to cap the upside early this week. If overcome, however, the 10,850 region may be revisited.

Support sits between last week's 10,583 low, the 24 July trough at 10,578 and the 25 May-to-25 June highs at 10,573-to-10,568.

Short-term outlook: bullish while above 10,568

Medium-term outlook: bullish while above the 15 June high at 10,568

FTSE 100 daily candlestick chart Source: TradingView GBP/USD slips towards support

GBP/USD's slide from last week's $1.3568 high is approaching its early September $1.3475 low. A fall through it would probably push the 55-day simple moving average (SMA) and June-to-September uptrend line at $1.3463 to the fore. Further potential support may be seen along the 200-day simple moving average (SMA) at $1.3451.

Only a bullish reversal and rise above last week's high at $1.3568 may lead to the April-to-August highs at $1.3599-to-$1.3676 to being reached.

Short-term outlook: bearish while below the 9 September high at $1.3568

Medium-term outlook: neutral with a bullish undertone while trading above the 7 August low at $1.3434

GBP/USD daily candlestick chart Source: TradingView Gold nears support

Spot gold's decline is taking it towards last week's $4,282.63 low, a fall through which may open the door to the 55-day simple moving average (SMA) at $4,256.69 being hit. Another potential downside target is the early July high at $4,202.70.

Minor resistance sits at the 4 September low at $4,365.57, the August-to-September downtrend line at $4,390.00 and at the 8 September high at $4,442.98.

Short-term outlook: bearish while below the 3 September high at $4,510.93

Medium-term outlook: neutral while above the 2 September low at $4,282.63 on a daily chart closing basis; a fall through this level would change the forecast to a bearish one

Gold daily candlestick chart Source: TradingView Important to know

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