On August 26, the US Commerce Department published July Personal Consumption Expenditures (PCE) index data. Core PCE increased by 0.2% month-on-month and 3.3% year-on-year, aligning with market forecasts. Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, observed that the slight inflation surprise was insufficient to alter expectations ahead of the Federal Reserve’s September meeting.
Earlier, on August 19, the minutes from the Federal Reserve’s July meeting revealed that policymakers remained amenable to further rate hikes should inflationary pressures endure, with three committee members already voting for an increase. Consequently, Treasury yields hover near multi-year highs, maintaining market expectations tilted toward further monetary tightening.
Technical Analysis of Dow Jones
The four-hour Dow Jones chart (WS30m on FXOpen) indicates a short-term downtrend, with prices steadily descending from a local peak near 54,700 to form a descending trendline.
On August 25, the index breached this trendline and subsequently established the current market profile. It is currently trading between the Point of Control (POC) at 53,490 and the profile’s upper boundary at 53,700.
Should the breakout develop into a sustained advance, the next significant level to monitor is the resistance area near 53,900.
Conversely, if the trend breakout fails and the decline resumes, the price must first move through the POC at 53,490 and then break below the lower profile boundary at 53,320. Only after clearing this zone would the path toward the support level near 53,150 become more accessible.
The RSI + MAs indicator currently displays readings of 52, 55, and 51. Both the oscillator and moving averages remain in the neutral zone, though the moving averages continue to signal a bullish bias.
Key Takeaways
The attempt to break above the descending trendline is occurring within a dense market-profile area, offering no clear confirmation of a sustained directional move.
The index’s next directional move will likely depend on whether the current divergence in expectations regarding the Fed’s September decision persists, or whether incoming economic data shifts the balance decisively.
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