Dow Jones (INDEXDJX: .DJI) Index has started the week in green as the global banking concerns ease. After tagging its new YTD low of 31,429 points, Dow Jones Industrial Average is up $3.1%. This also puts the index 13% above its October 2022 lows.
On Tuesday, Dow Futures opened higher but couldn’t keep the momentum. Till press time, the futures were down 41 points during their London session. Despite a 3% bounce from its monthly lows, there could be more downside for the index tracking 30 top US companies.
Last week, the FOMC meeting concluded with a 25 basis points rate hike. Even though the hike was at par with market expectations, the US equities still dropped. Dow Jones Index also fell by more than 500 points as many analysts were expecting a pause in rate hikes.
Due to the recent failures of multiple banks, US Federal Reserve is facing a catch-22 situation. On the one hand, constant rate hikes have put the banking industry at risk due to the decreasing bond prices. While on the other hand, a pause in rate hikes at this stage might result in a surge in inflation.
As clear from the following INDEXDJX: .DJI chart, the top US index, retested its November 2022 lows in March 2023. The retest of this 31,700 points level was predicted in our last Dow Jones Index forecast. This retest resulted in a bounce from the support on the daily chart.
Another key level on the following chart is the 32,335 level, where lies the 200-moving average on the daily chart. After a drop below this critical indicator earlier in the month, bulls are attempting to reclaim it. A rejection from 200-day MA may result in another retest of the 31,700 points level or even a much bigger drop.
This post was last modified on Mar 28, 2023, 14:20 BST 14:20