The S&P 500 broke out of its recent range and pushed to fresh record highs this week as optimism over a potential US-Iran deal lifted risk sentiment. Gains cooled slightly after an expected announcement failed to materialize, but hopes for an agreement kept the index supported. Attention now turns to next week's US CPI report, critical for the September FOMC decision.
The S&P 500 broke out of its range and pushed to fresh record highs this week, as fading fears of a US-Iran conflict lifted risk sentiment and eased worries over inflation and Federal Reserve tightening. But the rally cooled after an expected deal announcement failed to materialize, even as hopes for an agreement kept the index supported.
Key technical levels for the S&P 500
On the daily chart, the index broke above resistance at 7,640 and extended gains into the 7,800 level before pulling back. The move looks like an ascending channel, with price rejected near the top trendline; sellers may look to fade the rally toward the bottom trendline, while buyers need a break higher to build bullish bets toward new highs. On the four-hour chart, an upward trendline defines the bullish momentum, and a break below it and the 7,640 support could open the door toward the 7,350 level at the base of the channel.
Iran diplomacy drives the rally
The index opened with a positive gap on Monday after President Trump called off planned weekend strikes on Iran. Momentum then built after Qatari mediators said the language for a possible US-Iran agreement had been drafted. It gathered further pace once US Treasury Secretary Bessent confirmed that an Iran deal could have come as soon as yesterday, including a reopening of the Strait of Hormuz.
Gains were trimmed later in the week, likely because the anticipated timeline for the deal passed without an announcement. Nevertheless, hopes for a deal should keep the S&P 500 supported unless there's another escalation.
CPI report is the next test for Fed policy
Traders now turn to next week's US CPI report, which will be critical for the September FOMC decision and the Jackson Hole Symposium. A hot inflation print would likely trigger a short-term selloff as traders increase rate-hike bets, while a soft report would further ease Fed tightening risk and could give the S&P 500 another boost. Today brings the latest US jobless claims figures. Tomorrow's US non-farm payrolls report closes out the week.
Source: Investinglive
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