S&P 500 Forecast: S&P 500 Not Out of the Woods, Dovish Bailey Downs GBP

[MongiIG]

S&P 500 Analysis and News

• S&P 500 | OPEX Offers Potential Headwinds
• Dovish Bailey Downs GBP

S&P 500 | Not Out of the Woods Yet

A firm start to the week for the S&P 500, finding comfort from an unwind of war trades with gold and oil under notable pressure this morning. That said, the relief rally in the S&P 500 is nearing resistance situated at 4590-4600, presenting itself as an area to fade the recent rally. The S&P 500 is not out of the woods yet and while the geopolitical tensions have taken a step back, the uber hawkish Fed trade remains. In turn, the bias is still a fade on rallies for the index as the Fed look to get monetary policy back to neutral or above as quickly as possible.

S&P 500 Price Chart: Daily Time Frame

Source: Refinitiv

	PRICE	50DMA	100DMA	200DMA	RSI	IG SENTIMENT
Europe
FTSE 100	7533	7424	7372	7239	59	Mixed
DAX	14613	14710	15258	15432	55	Bullish
US
S&P 500	4543	4412	4477	4546	60	Mixed

Dovish Bailey Downs GBP

Bank of England Governor Bailey noted that the MPC’s change in forward guidance, from policy tightening was likely appropriate to saying it may be appropriate, reflected the level of uncertainty and risks faced. The Governor also reiterated that the MPC sees inflation risks in both directions over the longer term outlook, while also flagging risks over the beginning of a growth slowdown. While the BoE have hiked in three consecutive meetings and expected to hike rates again in May, they appear to be showing concerns over the cost of living squeeze, which in turn could perhaps see the BoE pausing their hiking cycle with the Bank rate at 1%. For GBP, this means the currency will continue to perform poorly against currencies backed by an increasingly hawkish central bank, while GBP/USD is at risk of another 1.30 test.

Full thread of BoE Governor Bailey comments, click here

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Mar 28, 2022 |  DailyFX
Justin McQueen, Strategist