Yesterday, the Federal Reserve published a unanimous decision to leave the base rate unchanged for the third time in a row, which coincided with the expectations of most market participants. At the conference that followed, Powell's rhetoric was not as harsh as before. According to him:
→ economic activity is slowing, but the labor market remains strong;
→ inflation is still high, the Fed is committed to achieving the 2% target;
→ rates may rise if the US economy grows above expectations;
→ during discussions within the Fed, the topic of lowering rates becomes more relevant.
As a result, the increasingly clear prospect of rate cuts weakened the dollar greatly:
→ increased currency price relative to USD. The pound rose in price from the important support of 1.25, which we wrote about yesterday.
→ gold rose in price, again rising above the psychological level of $2,000 per ounce, as we expected in the analysis of December 5;
→ US stock indices rose in price.
In particular, the Dow Jones index set a historical maximum, and the S&P 500 is close to it. The graph shows that:
→ the price of the S&P 500 forms an ascending channel (shown in blue). The bearish breakout at the end of October turned out to be false;
→ after yesterday’s events, the price rose to the upper half of the channel, indicating positive sentiment in the market;
→ if the trend continues, the price may reach the upper boundary of the channel — while setting a historical maximum;
→ the resistance at 4,600 has been confidently broken, in the future it can serve as support;
→ RSI is in the overbought zone – the highest this year on the daily time frame;
→ it is possible that after a stormy week the S&P 500 will cool down – that is, consolidate, with the probability of testing the level of 4,700.
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