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Figure Heloc KEY POINTS:US CPI surprises to the downside, potentially opening the door for an earlier than expected rate cutUS Jobless Claims disagree with NFP report. We’ll get a clearer picture next month.Key technical levels are limiting the upside. Traders are waiting for breakouts.FUNDAMENTAL
OVERVIEWThe US CPI yesterday surprised to the downside across the
board, but as we’ve seen with the NFP report, the market took the data with a pinch
of salt. The S&P 500 strengthened following the CPI release but eventually
gave back some of the gains as the bullish momentum faded. It should also be noted
that we got the US Jobless Claims yesterday and the data was strong.
The Initial Claims remain around the same low levels we got used to for years,
but Continuing Claims dropped to the lowest level since May. The main takeaway is that
the recent data shows gradual cooling in the labour market, with inflation
undershooting Fed’s forecasts. Fed Chair Powell made it pretty clear in his
last press conference that they are more focused on the labour market weakness,
and they can tolerate some higher inflation given the transitory expectations. This suggests that we could
see another rate cut sooner than expected, especially if the recent data gets
validated next month. The market should start to move into that direction with new
all-time highs likely being in the cards. S&P 500
TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn
the daily chart, we can see that
the S&P 500 probed below the key support zone around the 6800 level but
eventually bounced back strongly. The buyers
piled in as soon as the price rose back above the 6800 level with a defined
risk below it to target new all-time highs. The sellers will need the price to
break below the support to open the door for a bigger correction into the
October lows.S&P 500
TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn
the 4 hour chart, we can see that
we have a downward trendline defining the recent pullback into the 6800
support. The price got rejected yesterday but it’s now coming back to retest
the trendline. The sellers will likely continue to lean on the trendline to
keep targeting a break below the 6800 support, while the buyers will look for a
break higher to increase the bullish bets into a new all-time high.S&P 500
TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we can
see that we have a minor resistance around the 6885 level. In case we break
above the trendline, the resistance will likely be the last level of defence
for the sellers as a break above it should open the door for new all-time
highs. The red lines define the average daily range for today.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
The recent US CPI data came in lower than expected, and here’s why that matters: it could set the stage for an earlier rate cut. A softer inflation reading typically eases pressure on the Federal Reserve to maintain aggressive interest rate hikes, which could lead to a more favorable environment for risk assets. However, the conflicting signals from jobless claims versus the NFP report suggest that the labor market remains a mixed bag, complicating the Fed’s decision-making process. Traders should keep an eye on key technical levels, as the current market is constrained, waiting for a breakout that could signal a shift in sentiment. If we see a sustained move above resistance levels, it could trigger a wave of buying, especially in equities and crypto markets. But don’t overlook the potential for volatility; if the jobless claims trend continues to diverge from NFP, it could lead to unexpected market reactions. Watch for the next CPI report and any Fed commentary for clues on future rate cuts, as these will be critical in shaping market expectations and trading strategies.
📮 Takeaway
Monitor key resistance levels closely; a breakout could signal a shift in market sentiment, especially if CPI trends continue to support rate cuts.
