US equities alongside with forex trading activity around the US dollar had picked up in the recent days. The hurricane Irma had passed and the political tensions between the US and North Korea had decreased, offering the possibility of a short-term rebound.
However, recent comments from the US regarding the widely expected Fiscal Plan had boosted the Dow Jones Industrial Average and S&P 500 towards record highs. US President Donald Trump has promised several times during his presidential campaign that he will reshape United States’ Fiscal Code and design a new one that will enable business to prosper and reduce taxes for middle and lower class citizens. Recent news suggest that further information regarding that plan are due to being released in two weeks from now, but the markets’ optimism had already surged.
Dow Jones heading towards record high established last month
Looking at our chart below, you can see that the price had rebounded sharply and it is now heading towards 22179 area, where it started to retrace last month. It is also worth to mention that there we have an all-time high. However, judging by the current price development a breakout above it and a continuation higher seems very likely.
In case the price will manage to retrace lower, 22088 and 22039 could act as support areas and cap the downside. At this point in time, sellers should have limited impact since another reason that supports the upside trend is the fact that the market is pricing in a very low probability of a new Fed rate hike until the end of the year. Recent inflation developments do not encourage that move and if conditions do not improve, the Fed will most likely postpone the increase in rates for next year, in order to see first an improvement.
To sum up, US equities together with the forex market activity around the US dollar pairs could remain volatile for the short-term since there are a few events which could have a strong impact.
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