Should the index decline further, the 25000 level will be expected to continue to offer support. The 27000 level continues to loom above having placed downward pressure on the index recently and earlier in the year.
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. During its rapid fall, the US30 index completely ignored any possible levels of support on the way lower indicating how strong the move was. Fortunately the index has been able to rally higher in the last two months, consolidate around 22000 before its recent move higher up through resistance at 25000.
Boston Federal Reserve (Fed) Bank President Eric Rosengren believes that due to the ongoing community spread of COVID-19, the U.S. economy is expected to grow more slowly than people had hoped. "Some of the better economic data we've been getting has reflected the fact that those places are opening up, but they may not be opening up as safely as they need to," said Mr Rosengren. "If the result is that they (officials) have to impose new restrictions later in the year, that actually is going to slow down the economic recovery," he said, mentioning that the coronavirus pandemic and economy are "very closely intertwined." "That is actually my baseline forecast, (which) is that unfortunately we're unlikely to stop the community spread, and we'll be in a situation where the economy is growing more slowly than we might have hoped a few months ago," he added. There have been more than 120,000 COVID-19-related deaths reported in the United States, with more than 2.4 million cases, as approximately 30,000 new cases continue to be reported every day. Mr Rosengren believes the Fed’s recently launched Main Street Lending Facility provides "insurance" against what he expects to be a difficult second half of the year.
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