The US index is recovering from last month plunge that was caused largely by persistently high inflation and the Fed's aggressive monetary tightening prospects, while geopolitical factors also weighed.
This week the economic calendar has been rather light and no major central bank news have emerged, but investors brace for another inflation update. January's US Consumer Price Index is due on Thursday, after December's Headline CPI Inflation surged to 7% - the highest since 1982.
The earnings season is in full deploy in the United States and this has mostly been supportive for the index and the stock market in general, despite some high-profile disappointments. Major Dow30 constituents, such as Apple and Microsoft have reported solid financial results. Disney stands out today after market close and Coca Cola on Thursday before market open.
US30 had plunged in January to the lowest levels since June of the past year, but a recovery ensued, with the current one being the third straight profitable week. Today it is upbeat and its recent advance has brought the 36,000-71 area in the spotlight, which is the 76.4% Fibonacci of the January High/Low drop, although it may be early for a larger rise towards and beyond 36,532.
The move however seems overextended and the previous effort to surpass 35,700 had ended in failure and had sparked selling pressure. Despite today's upbeat mood, the index remains in danger of renewed pressure that could send it below the EMA 200 (at around 35,350) and put the ascending trend-line from this year's low in question (35,062-00). From there on though, the downside seems well protected from a technical standpoint, as the 34,792-34,612 region contains this month's low and the 200Days EMA.
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.