US indices started the day in negative territory with the Dow Jones being the only one to end in the red with a loss of 22 points. With the US market being under pressure since Friday’s NFP report showed solid jobs growth, we will look to Fed Chairman Powell’s monetary policy testimony today and tomorrow to either reinforce or disappoint market expectations of a rate cut in July. Until we see the Fed deliver easier monetary policy, continued strength in US equities will largely depend on the Fed’s degree of dovishness and US-China trade developments. There are no major economic releases and Powell’s testimony will be the market moving event of the day.
The Dow opened lower on Tuesday before ending with a marginal loss of 0.08% at 26783. The price dipped and found support at the 100-period MA around 12660 as buyers came in to drive the Dow towards the resistance at 12800. Today, look to the 20-period MA around 26810/26830 to determine near-term direction on the Dow, as a sustained move below this zone would maintain the bearish bias whilst a break below the support at 12660 would be required to target lower levels at 12600 and 12575. Alternately, trading above 26830 would indicate buying pressure and target resistance at 26890.
Support: 26660/ 26600