Key Talking Points:
- Traders will be keeping an eye out for US CPI data this afternoon
- FTSE 100 could have a clear path towards 7,500 if it breaks above current resistance
The FTSE 100 has attempted to push above the 7,100 mark again this morning despite ongoing concerns about inflationary pressures. The focus today is likely to be on the US CPI data out later this afternoon, where traders will be keeping an eye out for any unexpected rise in prices ahead of the Federal Reserve meeting next week.
It is unlikely that the Fed will make any changes to its monetary policy as it has been consistent with its messages about the need to see a recovery in the jobs market before any support is withdrawn from the economy, but a stronger reading in today’s CPI data may prompt traders to seek some protection, which would have a negative effect on traditional assets like stocks.
Bringing our attention back to Europe, the ECB meeting will take place later today, although I do expect this to be a non-eventer and to have a limited impact on the markets. In the UK, tensions continue with the European Union over the Northern Ireland border and a possible delay to the reopening plans is also keeping UK assets subdued.
FTSE 100 Levels
Current momentum seems to be bullish although the FTSE 100 has been stuck in its current range for a month so there is likely to be some further resistance along the way before we get a significant break higher. Immediate resistance can be found at today’s high (7,110), followed by last week’s monthly top at 7,122. A break above this area brings the UK index closer in line with its European counterparts in terms of recovery from the pandemic lows, but there is still some ground to cover before the FTSE 100 returns to the highs seen before Covid.
Looking at the price action last March, there isn’t a clear resistance from 7,175 to 7,500 so it may be a case where the FTSE 100 drifts higher whilst it slowly consolidates momentum or we may see a strong surge. The weekly chart does show some price action around the 7,432 area, so we may see this level offer some resistance.
FTSE 100 Weekly chart
| Change in | Longs | Shorts | OI |
| Daily | 11% | -13% | 1% |
| Weekly | -18% | 14% | -10% |
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--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
