08:54, 02 April

Surges to Four Month High as Some Believe Fed Needs to Cut Rates

The US30 index has surged higher in the last 24 hours to push through the resistance at 26000 and move to a new four month high. It has been slowly climbing higher in the last few days and may have been caught by the selling at 26000 level again, however that has clearly given way to significant buying pressure. The US30 index seems to have been content to trade in a narrow range roughly between 25400 and 26200 for the last month, before the recent break. 
In early February the index seemed content to have consolidated in a narrow range right above the significant level of 25,000 before it began its slow climb higher. It was able to resume what has become a very steady climb higher which started back in December.

At the end of January, the 25000 level offered some resistance to the index however this was quickly broken through, only for the level to prop up the index since, and this level remains key. For the last few months, the two key levels of 24,000 and 25,000 have been playing a role and influencing price action. In the last couple of months, the index has done very well to move back within the range between these two levels, after falling to its lowest levels in 18 months below 21,500. It met some resistance at 24,000 before moving through.

December was several weeks the US30 index would rather forget as it fell very sharply down through any support at the 25,000 level and then also through the 24,000 level down to that 18 month low. In late November it enjoyed a healthy surge higher climbing back above the key 25,000 level to above 26,000 before reversing sharply and falling lower. The last few months have seen the index moving sharply between 24,000 and 26,000 as the volatility and the swings back and forth intensified before the massive drops in December which was the most volatile the index has been in many years.

U.S. manufacturing activity expanded last month, rebounding from its lowest level since late 2016, according to data from the Institute for Supply Management.  After their recent two-day Federal Open Market Committee meeting, the U.S. Federal Reserve (Fed) officially stated as there will be no more rate rises in 2019.  The Fed held interest rates steady and its policymakers abandoned projections for further rate hikes this year as the U.S. central bank flagged an expected slowdown in the economy.  In a unanimous move that aligned with market expectations, the FOMC made a sharp dovish turn from policy projections just three months earlier.  Despite today's data, data released a couple of weeks ago in the United States, underscored growing pressure on the U.S. economy, as the number of Americans filing applications for unemployment benefits increased more than expected last week while new home sales fell more than expected in January.  There are now calls for the Fed to drop interest rates again which would be a complete backflip.  Fed officials are now battling a growing opinion in markets, that the Fed will need to cut rates before long, which has been embraced by U.S. President Trump’s administration.