Dow Jones Retraced After Fed Raised Interest Rates
By: Eddy Peng Jun 14, 2018
Dow Jones Industrial Average retraced from the session highs since February, down 138.5 points and closing at 25192.2 on Wednesday as the Federal Reserve struck a hawkish tone in its latest policy statement.
U.S. Federal Reserve officials raised interest rates for the second time this year and upgraded their forecast that two more rate hikes will be taken in 2018, as the unemployment rate falls and inflation rises. While the median estimate implied three increases in 2019, to put the rate above the level where officials see policy neither stimulating nor restraining the economy.
On the other hand, Fed Chairman Jerome Powell set a dovish tone in the meeting, saying that raising rates too quickly could be harmful to the economy. He also added that the bank won’t over-react to inflation levels above 2 percent.
On a daily chart, Dow Jones Industrial Average is currently moving in an ascending channel, which has prevented the index from rising further this time. The ascending moving pattern started on late March, the starting point of a reversal. After retreating from the upper line, it likely continues to fall to find a support on MA20, and further decline will expose another support level near 24848 (61.8% retracement).
Chart 1: US30 Daily
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