US30 fell, reversing earlier gains, after the Federal Reserve paused its rate hike cycle at ten. However, the Nasdaq was up 0.7% after the news.
US30 – Daily Chart
The price of US30 was higher on the Fed announcement but fell back later in the day, with the 34,250 resistance level holding.
The days ahead could be crucial for the index and see a correction unfold.
The US central bank decided not to enact an eleventh rate hike, waiting to see how the economy reacts before adding further pressure to households and businesses.
Fed Chair Jerome Powell and the FOMC kept borrowing rates unchanged at 5-5.25%. The driver for the recent pause was a drop in the latest consumer inflation reading to 4%. Core inflation is still a concern, which the FOMC said could force further rate hikes in the summer.
“The committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee’s goals,” a statement said. Fed officials now have a target of 5.6% by the end of the year in interest rates, which also pours cold water on hopes for rate cuts.
“Nearly all” officials “expect that it’ll be appropriate to raise interest rates somewhat further by the end of the year, but at this meeting, considering how far and how fast we’ve moved, we judged it prudent to pause to assess additional information,” Powell said.
“We understand the hardship that high inflation is causing, and we remain strongly committed to bring inflation back down to our 2% goal,” Powell said at a news conference. “The process of getting inflation down is going to be a gradual one — it’s going to take some time.”
Investors should watch the resistance level in US30 for a potential pullback in the coming days.
