Equities resumed positive momentum towards the end of last week. While still remaining below the recently created all- time- high markets remains positive. A break above resistance levels, might indicate fresh upside momentum. The generally positive sentiment might depend on the outlook in regards to the war with Iran. Market participants remain confident that an agreement between the US and Iran can finally be made, which might also offer relief to the growing worries in regards to inflation. Trump said on Sunday that a deal with Iran to reopen the Strait of Hormuz had been “largely negotiated”.

The consumer price index from Australia will offer important insights this week. The RBA had increased rates twice in February and March this year, in order to curb inflation. Especially the rise in energy prices remains a burden. Prices are now expected to fall further and might hence impact the AUDUSD currency pair this week. Furthermore, also the PCE price index from the United States might be interesting. The core index is expected to remain stable at 0.3% on a monthly basis. The reading will be important for the next FOMC rate decision with the new chair Kevin Warsh on the 18^th of June.

Important events this week:

– AU – consumer price index– consumer prices are expected to fall further in Australia. After prices began to rise in January and February this year, they stabilised following the Royal Bank of Australia’s interest rate rises. A decline of the cpi reading is currently expected and might also cause the AUD to weaken further.

AUDUSD daily chart

The AUDUSD currency pair above shows that the market has stabilized right on top of the 50- moving average zone, based on the daily chart. A break of the level at 0.7100 might add fresh pressure to the pair. Yet, currently it looks like more upside momentum could be on the cards. Especially a break above 0.7150 might unleash new buying momentum, which could lift the AUD back to recent highs. A stronger than expected reading might help the pair to gear up momentum, while a disappointing figure might push the pair below the important support zone. The consumer price report will be released on Wednesday, May 27 at 03:30 CET.

– US – Core pce price index– The price index is the primary source of data for the Federal Reserve Bank to determine their interest rate decisions. It offers insights into the change of prices for goods and services. The index excludes food and energy and differs from the consumer price index, as it is constructed using a broader set of consumption data. It reflects actual spending rather than a fixed basket of goods and is hence less sensitive to short- term price swings.

USDJPY, weekly chart

The US- dollar has been gearing up momentum in the past two weeks as the USDJPY currency pair confirms. Not only did the pair break above the 50- moving average zone based on the daily chart but also on the weekly chart the currency pair keeps rising. A break above the 160.00 price level might then unleash another push higher. A higher reading of the price index might also help here while a lower number might cause the opposite.

In this case the dollar might even push lower and break the important support zone of 156.50. Falling prices might cause the Fed to cut rates to stimulate the economy. The index will be released on Thursday, May 28 at 14:30 CET.