It was also meeting resistance around 26400, however this has now been broken and this level may offer some support should it decline in the next few days.
In the first week of July, the index consolidated a little in a narrow range roughly between 26500 and 26900, and it used that period of consolidating to great effect pushing higher to the new highs. The consolidation is also of little surprise after its price action over the few weeks beforehand. In early June the US30 index rallied strongly to return to back above the 25000 level and continue beyond another key level in 26000 to reach a then one month high, before consolidating a little and enjoying some support from 26000.
Given the significance of the 26000 level, there was little surprise that the index enjoyed some support from this level as it consolidated and it now finds itself moving higher on the back of that support. Despite its excursion below 25000 in late May, this level remained likely to offer some support to the index. The month of May saw a strong decline for the index moving from a near all time high around 26700 down to its recent four month low.
St. Louis Federal Reserve (Fed) President James Bullard has been outspoken this week about what he believes the Fed should do to align itself with market expectations. He believes the Fed should cut interest rates by 50 basis points in two weeks time at its next meeting as the market is expecting it. In July, the Fed reduced borrowing costs by a quarter point, its first rate cut since 2008.It is rare for central bank officials to admit that financial markets should dictate policy, however “in this situation I would respect the market signal,” Bullard said. “We should have a robust debate about moving 50 basis points at this meeting ... It’d be better in my mind to go ahead and get realigned right now,” rather than moving only a quarter point in September and again in October.“Why do that? Why not just get to the right point today?”, he added. Recent economic data showed the U.S. manufacturing sector had contracted for the first time in three years amid slowing global economic growth and as the United States and China continue with adding tariffs.
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.