Traders can expect an exciting week as the Fed, BoE, and BoJ are announcing rate decisions. The Fed is expected to increase rates as last week’s US inflation report lifted the probability of a rate hike to 90%, while the probability of a BoE hike is only at 30%. In the case of the BoJ, Reuters reported that 66 of 68 economists expect to lift from 1% to 1.25%.
Brent surges above $106 as pipeline disruption revives supply fears
Brent crude surged back above $100 on Monday after weekend attacks intensified concerns over Middle East oil flows. Saudi Arabia temporarily shut its critical East-West pipeline following drone strikes, disrupting a key route used to bypass the Strait of Hormuz, while shipping traffic through Hormuz remained well below recent averages. Hopes for a diplomatic breakthrough also faded after planned talks between Iran and Gulf states on managing shipping through the strait were postponed, helping push Brent above $106.
Tactically: a breakout above 106.34, its four-month high, could unlock a 6% move towards 112.68, an eight-month high.
GBPJPY caught between BoJ hike bets and a UK data storm
Sterling faces UK employment on Tuesday and inflation data on Wednesday ahead of the BoE rate decision on Thursday, while the yen is gaining against the pound as expectations build for a BoJ rate hike on Friday. Stronger UK data could support the pound, but expectations of tighter Japanese monetary policy have dominated charts since July 30, when GBPJPY dropped 898 pips in a single day. The BoJ is likely to raise rates, the question is if they will keep increasing rates, that is the key factor traders will watch. The BoJ should leave rates unchanged on Thursday.
Tactically: the GBPJPY pair remains bearish below 211.81. A rejection at 209.49 could trigger a 242-pip decline towards 207.09.
ETHUSD eyes flag breakout as Fed decision looms
ETHUSD extended its recovery despite hotter US inflation, which would normally pressure crypto by pushing interest-rate expectations and Treasury yields higher. That reaction was softened by the dollar's failure to strengthen significantly, while Friday's sharp drop in oil prices eased concerns that elevated energy costs could add further inflation pressure. However, the CPI report still lifted the probability of a Fed rate hike this week to around 90%, leaving Wednesday's decision as the key test of whether Ethereum can sustain its recovery. For now the chart is looking bullish.
Tactically: ETHUSD bulls are looking to confirm its flag breakout above 2,567. If this happens, we would see ETHUSD rally 24% towards 3,186, an eight-month high.
This article is general market commentary, not investment advice. Trade responsibly.
