Trade of the Day: Dow Jones

Fundamental Analysis

* Rate Cut Speculation: Rising expectations that the Federal Reserve might consider cutting interest rates have prompted Dow Jones to edge higher. According to the Bureau of Economic Analysis, the US Core PCE Price Index declined from 0.20% to 0.10%, missing market expectations. This weaker inflation data has increased the likelihood of more aggressive rate cuts, with the CME’s FedWatch Tool indicating a 56.7% chance of a 50-basis-point cut at the November Fed meeting, up from 49.9%. If these expectations hold, the Dow Jones may extend its rally towards the next resistance level at 43,010.

Technical Analysis

* Technical Breakout: : The Dow Jones breaking above the 38.2% Fibonacci expansion level signals potential for further gains.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards the resistance level of 43,010. Conversely, a potential reversal is also to be expected, and the price could head back towards 40,700.

Potential Risks

There is a potential risk that if the inflation data comes in more than expected, it could dampen hopes of aggressive rate cuts, leading to a sharp market correction. Any indication of persistent inflationary pressures may force the Fed to maintain its current policy stance, which could trigger volatility in the Dow Jones and broader US equity markets.

Learn more about how to navigate the prop trading landscape by checking out PU Xtrader’s trading blogs.

Monitoring

Looking ahead, investors are closely monitoring the upcoming release of PCE inflation data for August on Friday, which could provide critical insights into the Federal Reserve’s future interest rate decisions. Following PU Xtrader’s financial news page.

Register For PU Xtrader Challenge And Start Prop Trading

Take Challenge