FTSE 100, DAX 40 and Dow remain bid ahead of FOMC rate decision
Outlook on FTSE 100, DAX 40 and Dow ahead of Wednesday’s FOMC rate decision.
FTSE 100 advance pauses on stronger than expected inflation data
The FTSE 100 remains bid on the back of stronger Asian stocks which followed Wall Street higher amid hopes that the banking crisis is on the wane.
However, the fact that UK inflation unexpectedly rose to 10.4% in February compared to 10.1% in January may put a dampener on proceedings on Wednesday, ahead of the Federal Reserve’s (Fed) monetary policy meeting later today.
The FTSE 100 is thus expected to remain below Tuesday’s high at 7,568 ahead of the FOMC meeting and may trade around the 7,500 mark until then.
A rise and daily chart close above Tuesday’s high at 7,568 would push the 15 March high at 7,641 to the fore, above which sits strong resistance at 7,708 to 7,724, made up of the mid-January and early February lows.
Support can be seen at the 7,412 early January low and along the 200-day simple moving average (SMA) at 7,425.
Recent DAX 40 rally pauses around the 55-day SMA
The DAX 40 has regained much of its recent losses and trades back around the 55-day SMA at 15,238 where it may consolidate ahead of Wednesday’s FOMC meeting at which a 25-basis point rate hike is expected to be announced, taking the US fed funds rate to 4.75% to 5.00%.
Support at the 15,157 high seen last Friday may hold in the short-term. If not, the early March low at 15,144 may be revisited, below which lies stronger support at the mid- to late January lows at 14,992 to 14,904. This needs to hold for the recent upside bias to remain intact.
A rise and daily chart close above the 14 March high at 15,273 would open the way for the 13 March high at 14,486 to be reached, an advance above which would confirm the resumption of the October-to-March medium-term uptrend.
Dow probes key resistance zone ahead of FOMC rate decision
The Dow Jones Industrial Average has managed to rise and close back above its 200-day SMA on Tuesday amid hopes that the worst of the banking crisis is over and ahead of Wednesday’s FOMC meeting at which a 25-basis point hike is expected to be seen with a near 88% probability according to the CME’s FedWatch tool.
The Dow also closed on a daily chart basis above the 10 November, December and early March lows at 32,420 to 32,495 which represented a resistance area.
For the bulls to be back in control, another daily chart close above 32,495 should ideally be seen in which case the 9 March high at 32,982 may be reached next.
Support below the 200-day SMA can be found in the 32,280 to 32,184 region.
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