S&P 500, US Dollar Talking Points:
The Fed hiked charges by 75 foundation factors on the July price choice and, at this level, markets have dealt with the information in a constructive method because the S&P 500 has jumped up to a recent six-week-high. The US Dollar pulled again and as of this writing is discovering assist across the weekly lows in a confluent zone. There’s a Fibonacci degree at 106.24 that’s helped to mark the lower-portion of that space together with a longer-term Fibonacci degree at 106.62. A trendline can also be in-play, which connects swing-lows type mid and late-June, the projection of which began to come into play final week. The grouping of wicks on the underside of candles on this space illustrates present assist serving to to maintain the lows.
US Dollar Four-Hour Price Chart
Chart ready by James Stanley; USD, DXY on Tradingview
If the Fed Hiked, Why Did the Dollar Drop?
There had been constructing fears of a doable 100 foundation level hike at this price choice so the truth that it got here in at 75 might have disillusioned a few of these exuberant price hike bets. But, all through the press convention, FOMC Chair Jerome Powell had a lot of feedback that could possibly be learn as supportive for threat, remarking that the slowdown in Q2 was notable and that job creation, whereas nonetheless strong has slowed. The extra essential element relating to future price hikes is inflation and Powell has opined that wagers are moderating and that the employment price index will likely be an essential indicator.
Powell additionally pointed to PCE as an inflation gauge and one thing that the financial institution will likely be watching carefully. He mentioned in some unspecified time in the future it is going to be acceptable to decelerate price hikes, and there simply so occurs to be a PCE launch on the financial calendar for this Friday.
So, possible, we’ll see this theme stay centerstage for the subsequent few days as tomorrow brings GDP and Friday brings PCE adopted by the University of Michigan Consumer Sentiment.
In USD, the Dollar stays perched close to just lately created 19 year-highs. The foreign money has been on its again foot for nearly two weeks, nonetheless, and the larger query as to whether or not bulls are in a position to drive USD or whether or not the foreign money pulls again to a deeper assist degree will possible have one thing to do with EUR/USD.
US Dollar Daily Price Chart
Chart ready by James Stanley; USD, DXY on Tradingview
S&P 500
The S&P 500 has ran up to a recent six-week-high on the again of this price choice, and this extends the transfer from yesterday’s assist take a look at to over 100 factors. That assist take a look at yesterday confirmed up at an attention-grabbing space, proper on the 23.6% retracement of the 2022 sell-off, which had beforehand helped to set resistance.
This additionally exposes the subsequent spot of doable resistance on the 38.2% retracement of that very same Fibonacci research, which plots round one other Fibonacci degree of notice on the 4100 degree. That spot was additionally prior assist in late-February, so this produces a little bit of confluence for resistance potential.
S&P 500 Daily Price Chart
Chart ready by James Stanley; S&P 500 on Tradingview
— Written by James Stanley, Senior Strategist, DailyFX.com & Head of DailyFX Education
Contact and comply with James on Twitter: @JStanleyFX
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