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US30 - Settles Around Key 28000 Level as Fed Meets



US30 - Settles Around Key 28000 Level as Fed Meets
In the last week or so, the US30 index has slowly but steadily rallied back to the key 28000 level after having dropped sharply from its six month high above 29000 back to a one month low near 27000 in the week prior. Any support received at 28000 was convincingly broken after having provided some support for a few days. It had previously broke through the key 28000 level which provided stiff resistance for more than one week, on its way to the high, and this level it provide some resistance currently after the recent rally. In the two weeks leading up to the resistance at 28000 around mid-August, the US30 index moved steadily higher reaching a then six month high just above 28000.

For a few weeks in July the US30 index meet resistance at another key level of 27000 whilst bouncing off support at 26000, and the 27000 level is highly likely to offer some support to the index if needed. For the most part of the last two months, the US30 index has traded in a range between support at 25000 and resistance at 28000, with the 27000 level also playing a key role in more recent weeks.

Throughout June, the index enjoyed solid support from another key level at 25000, while receiving some resistance from 26000 remaining in a range between these levels, up until the break a few weeks ago. Throughout April and May 25000 level had turned away the index on several occasions, reinforcing how significant the 25000 level had become in this period, and it has been able to provide some strong support to the index in the last month or so. Should the index decline further, the 25000 level will be expected to continue to offer support.

Throughout April, the US30 index rallied higher to a one month high near 25000, while the key level of 22500 supported the index. During this period, the US30 index settled right down content to trade right around the 24000 level, with the 25000 level looming above and continuing to offer resistance whenever the index rallied. The US30 index is also likely to receive some support from 22500 should it break back lower through 25000. Since mid-March the US30 index has done very well to regain most of the lost ground, after the significant drop where it moved from all time highs above 29000 down to a three year low near 18000.

The U.S. Federal Reserve (Fed) is currently in a two day meeting, which will be their last before the U.S. Presidential election.  Analysts expect Fed Chairman Jerome Powell to reiterate the Fed’s approach to do whatever it takes to support the economy.  Mr Powell holds a media conference after the meeting, and he is expected to be asked about the potential for higher inflation. The central bank has said it is more worried about disinflation, but recent inflation data has been higher than expected, although still well below 2%.  U.S equity markets have been more volatile of late and the markets may be looking to the central bank to calm markets, although the volatility may continue should the Fed disappoint and as investors focus on the economic recovery and the election.  The Fed is expected to update its interest rate and economic projections through to 2023, and it has the opportunity to provide more details of its new strategy, unveiled last month, which would allow inflation to run higher to help the economy recover.  Many analysts believe it is critical that the central bank provide unambiguous guidance on their new policy based on how important monetary policy is within the financial system.

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