Nasdaq Index Shows Uncertainty Ahead of PCE Release

The main event of the week is the release of the Personal Consumption Expenditures (PCE) index, which the Federal Reserve particularly focuses on when assessing inflation in the US. The release is scheduled for Friday at 15:30 GMT+3. As this important event approaches, rumours and trader expectations about the news increasingly impact the current price on the stock market.

According to ForexFactory, the Core PCE Price Index on a monthly basis is as follows:
→ forecast for Friday = 0.3%.
→ previous value (a month ago) = 0.3%;
→ value two months ago = 0.3%.

These figures indicate stable inflation, but surprises are not ruled out, which could certainly lead to a spike in volatility.

The price of the Nasdaq index (US Tech 100 mini on FXOpen) has decreased since the beginning of the week – this may indicate market participants' uncertainty about whether inflation will decrease. Meanwhile, as CNBC reports, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, believes that the Fed should wait for significant progress in combating inflation before lowering interest rates.

In his opinion, rates could potentially even be raised if inflation fails to decrease further. “I don’t think we should rule anything out at this point,” Kashkari added.

Technical analysis of the Nasdaq index (US Tech 100 mini on FXOpen) chart shows that:
→ the price is in an uptrend (shown by the blue channel);
→ the 18840 level is acting as resistance (indicated by the arrow).

Note the behaviour of the Nasdaq index price (US Tech 100 mini on FXOpen):
→ the upward impulse A→B was sharp, but it failed to hold above the 18840 level;
→ the upward impulse C→D is less sharp, judging by the slope of the trajectory. After overcoming the 18840 level, the price formed a rounding pattern (a sign of demand deficit) and decreased (confirmation of weakness). Notably, the price did not reach the upper boundary of the channel (shown by the red circle).

Today, the price is near the median line of the ascending channel, which could lead to some consolidation in anticipation of the news. If the news indicates a slowdown in inflation, we might see a new attack on the 18840 level; otherwise, the Nasdaq index price (US Tech 100 mini on FXOpen) could decrease to the lower boundary of the current channel.