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US30: MarketPulse reports that risk appetite has improved amidst more impartial Fed remarks


Table of Contents
    • Fed pares back hawkish commentary
    • Risk appetite improves for now
    • US30 faces major tests of resistance

    Equity markets are bouncing back on Tuesday after a risk-averse start to the week, buoyed perhaps by some promising Fed commentary on Monday.

    It would appear the recent surge in bond yields hasn’t gone unnoticed at the central bank, to the extent that Fed officials are coming across as less hawkish in their views. Higher yields have been cited by various policymakers in what appears to be a sign that they are a little uneasy about how much influence recent commentary has had.

    While the Fed has previously signalled that another rate hike is likely in the tightening cycle, the central bank is ultimately data-dependent and won’t want markets getting too carried away. It’s a tough balancing act and inflation data will be released on Thursday which should provide further clarity again after Friday’s mixed jobs report.

    It is perhaps a little surprising that markets have bounced back as quickly and strongly as they have given the clear risk aversion we saw at the start of the week. Hamas attacks in Israel created uncertainty around the Middle East and investors will no doubt continue to monitor the situation very closely.

    In light of the Fed commentary on Monday and how it’s contributed to the turnaround in the markets, there’ll be a lot of focus on further appearances today including Raphael Bostic, Christopher Waller, Neel Kashkari, and Mary Daly from the Fed and Christine Lagarde, President of the ECB.

    Correction yet to be tested

    The US30 is on course for a fifth consecutive session in the green but it’s yet to face a significant test following the sharp decline over the couple of weeks that preceded it.

    US30 Daily

    Source – OANDA on Trading View

    We could now be reaching the point at which the pullback is tested, with the initial one potentially coming around the 200/233-day simple moving average band. There appears to be decent momentum in the recovery which is promising but it will be interesting now to see whether that can be sustained the close it gets to that level.

    Just above here is also the 38.2% Fibonacci retracement level and the prior support from August which could reinforce that resistance level. Further major resistance lies just ahead too so this will be a very interesting test for the index, the likes of which we haven’t seen so far over the last week.

    Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at [email protected]. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

      Craig Erlam

      Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.

      Craig Erlam

      Craig Erlam

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