US30 Slides after its Best Week in 2+ Years

  • US30
    (${instrument.percentChange}%)

US30 Analysis

The Fed's aggressive tightening path has created fears of a slowdown in the economic activity and recent talk of "soft or softish landing" by Mr Powell [1], does not inspire much confidence that the bank won't send the economy into a recession and unemployment higher, while GDP contracted by 1.5 in Q1, as per last week's preliminary figures.

This has created an unfavorable environment for Wall Street this year, which culminated to a massive eight-week losing streak and fourteen-month lows earlier in May for US30.

However, inflation has shown some moderation recently and the Fed seems to be a bit conservative, with Mr Powell having hinted at 50 basis point increases "at the next two meetings", while ruling out more aggressive 75 basis point moves. [1]

US30 has been able to avoid a bear market and given last week's broader sentiment improvement, it managed to pause its losing streak with a relief rally that led to its best weekly performance in more than two years.

Today it comes under renewed pressure and falters above key levels, after governor Waller (voter) went a step further on Monday, backing 50 basis moves for "several meetings" and supporting interest rates "at a level above neutral" by the end of this year. [2]

US30 now risks with a return below the EMA200 (black line) towards 32,223, but it is probably early to talk for a steeper decline that could threaten 31,318.

On the other hand, as long as they defend the EMA100, bulls can build on last week's rally and make another push 33,649, but the daily Ichimoku cloud looms large (34,00-34,270).

Nikos Tzabouras

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.

References

1

Retrieved 31 May 2022 https://www.federalreserve.gov/monetarypolicy/fomcpresconf20220504.htm

2

Retrieved 25 Jun 2022 https://www.federalreserve.gov/newsevents/speech/waller20220530a.htm

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