The index plunged to bear territory earlier in the month and dropped to its lowest level since 2020 last week, after the Fed's aggressive rate hike. The US central bank increased rates by 75 basis points, the largest move in nearly 30 years, reacting to the resurgence of CPI inflation.
Chair Powell pointed to "either a 50 or 75 basis point increase" for the next meeting in July, while officials downgraded their economic growth forecasts and project higher unemployment ahead. 
This week, Mr Powell reiterated the bank's commitment to fight inflation, while Governor Bowman supporter another 0.75% move in July and hikes "of at least 50 basis points in the next few subsequent meetings". 
The recent commentary did not add anything new to the public debate and although the bank is very hawkish, there is no "whatever it takes" feeling. Furthermore, the bank may have reached peak hawkishness, as it does not foresee more aggressive moves than the one delivered last week.
This has given Wall Street the chance to recover, with the SPX500 trying to exit the bear market it entered last week, losing around 20% from its record highs, at the time of writing.
The relief rally brings the EMA200 (3,960-78) in the spotlight, but a catalyst will be required for challenging this level. Closes above it, will pause downward bias and could give it a chance to look towards the descending trendline from March (at around 4,150).
The rebound is so far contained to the 38.2% Fibonacci of the June High/Low drop, while fears of stagflation persist, since achieving a soft landing may be daunting task for the central bank.
Bears are still in control and the SPX500 remains in perilous position. There is high risk of fresh lows (3,637), although it may be early to talk about sub-3.500 moves.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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