S&P 500 broad market index futures are
rising 0.10% to 6,590 points on Monday, trading just below the all-time high of
6,600, which also serves as a strong resistance level. A confirmed breakout above this threshold could
trigger an extreme rally toward 6,850–6,950 points, but investors appear
unwilling to commit ahead of the Federal Reserve’s (Fed) upcoming decision.
Large institutional flows reflect this
hesitation. The SPDR S&P 500 ETF Trust (SPY) recorded an outflow of $1.96
billion last week, reversing the $5.17 billion inflow seen earlier in the week.
This pattern has now repeated for two consecutive weeks, with heavy selling by
the end of each week offsetting early gains. Five out of the last six weeks
have seen net outflows, totalling $11.3 billion, $2.4 billion, $2.7 billion,
$2.1 billion, and $2.0 billion, while only one week posted a modest inflow of
$134.7 million. This raises questions about the sustainability of any breakout
above the resistance zone of 6,610–6,630 points.
Until recently,
expectations were firm that the Fed
would deliver a 25 basis point
rate cut supported by softer labour market data, with slightly dovish guidance.
Under those conditions, a sustained move above 6,610–6,630
would have seemed justified. However, political developments have complicated
the outlook. The U.S. Department of Justice has petitioned the Court of Appeals
for the District of Columbia to permit President Donald Trump to dismiss FOMC
member Lisa Cook. A ruling is expected Monday, and if Cook is removed, she will
not participate in this week’s meeting. Such a development could tilt the
committee more dovishly than previously assumed.
The potential market reaction remains
uncertain. In the past, threats to the Fed’s independence have weighed on
sentiment, though recent criticism from Trump has had limited impact on the
S&P 500. The U.S. Dollar, however, has shown more sensitivity.
This week’s calendar features August retail
sales on Tuesday, expected to show a slowdown in monthly growth to 0.2% from
0.5%. The main event arrives Wednesday with the Fed decision. A 25 basis point
cut is widely expected, but uncertainty surrounds the updated economic
projections, the “dot plot,” Powell’s press conference, and the forward
guidance.
Technical signals will likely determine the
near-term direction. If the Fed decision fails to trigger an upside breakout,
the risk of a correction will increase. A decline to 6,400 would add
significant bearish pressure, opening the way to a primary downside target of
6,150–6,250. For now, the benchmark has reached its primary target zone of
6,500–6,600, trading at 6,591. Resistance remains at 6,610–6,630, with a
breakout above this level pointing toward 6,850–6,950, while support lies at
6,510–6,530.
In the oil market, Brent crude remains in a
technically unfavourable phase. Prices recently retested the $66.00–$68.00
support zone and have recovered to $67.17. Resistance is situated at
$76.00–$78.00, while deeper support is found at $56.00–$58.00.
Gold has extended gains, breaking above the
$3,600 resistance to reach a new all-time high of $3,674 per troy ounce. The
market is heavily overbought, leaving further upside uncertain. Immediate
resistance lies at $3,630–$3,650, with a sustained break above this range
opening the path toward $3,850–$3,950.
In currencies, the EURUSD is holding above
1.17000 after a successful retest, though the expected acceleration toward
1.19500–1.20500 has not yet materialised. The Cook ruling could serve as a
catalyst, but absent that, the pair may remain range-bound until after the Fed
decision. The breakout above 1.17000 is not yet fully confirmed, and an
alternative scenario of a pullback to 1.16000 remains in play.