Key Events:
- U.S. CPI report reflects mild inflation, supporting market risk appetite
- DXY eyes 96 support on rising rate cut expectations
- Nasdaq targets 24,000 on a combination of rate cut and AI-driven optimism
Forex pairs are rising against the U.S. dollar today after a mild U.S. CPI reading, confirming September rate cut expectations. This has pulled the DXY toward 97, while major indices continue to rally, with Nasdaq approaching the 24,000 checkpoint.
Trade talks remain in focus as China reportedly advised domestic firms to avoid Nvidia’s H20 AI chips in sensitive sectors over security concerns, despite the U.S. easing export restrictions. This adds a layer of uncertainty to U.S. tech momentum, even as indices rally on rate cut and AI optimism.
However, the September rate cut appears to be pricing in. As indices push toward record highs and the dollar faces the 17 year support level, key support and resistance zones are coming into focus — offering critical reference points for risk management amid broader market optimism.
Technical Analysis: Quantifying Uncertainties
DXY Outlook: Daily Time Frame – Log Scale
Source: Tradingview
Facing renewed selling pressure from dovish market fundamentals, the DXY has broken below the trendline connecting consecutive higher lows from the July bottom. It now approaches critical support levels between 97.20 and 96, which must hold to avoid a deeper decline toward the 2021 lows near 92 and 89.
Current weakness may reflect rate cut expectations already being priced in, with technical and fundamental oversold conditions potentially setting up a base for reversal. If a bounce occurs, key levels to watch on the upside are 98, 99, and 100.20.
Nasdaq Outlook: Weekly Time Frame – Log Scale
Source: Tradingview
The Nasdaq continues its primary uptrend, comfortably holding above recent highs and now eyeing the 24,000 checkpoint. A clean hold above 24,100 may open the door for further gains toward 24,300 and 24,700, followed by a possible consolidation before attempting the 25,000 level.
On the downside, any pullback below 24,000 may lead to a retest of support at 23,700, 23,500, and 22,900 — all seen as potential areas for bullish continuation setups.
Written by Razan Hilal, CMT
Follow on X:@Rh_waves
