E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Pressured by CPI Surge, Higher Yields
September E-mini Dow Jones Industrial Average futures are down sharply late Friday and in a position to post its biggest weekly percentage loss since January as a jump in U.S. consumer prices in May fueled fears of more aggressive interest rate hikes by the Federal Reserve.
At 18:00 GMT, September E-mini Dow Jones Industrial Average futures are trading 31436, down 800 or -2.48%. The SPDR Dow Jones Industrial Average ETF (DIA) is at $314.32, down $8.68 or -2.69%.
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Consumer Inflation Surge Drives Yields Higher
The U.S. Labor Department’s report, released before the cash market opening, showed the consumer price index (CPI) increased 1.0% last month after gaining 0.3% in April. Economists polled by Reuters had forecast the monthly CPI picking up 0.7%.
Year-on-year, CPI surged 8.6%, its biggest gain since 1981 and following an 8.3% jump in May.
Following the inflation report, two-year Treasury yields, which are highly sensitive to rate hikes, spiked to 3.057%, the highest since June 2008. Benchmark 10-year yields reached 3.178%, the highest since May 9.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The main trend changed to down on Thursday when sellers took out the last swing bottom at 32472. A trade through 33255 will change the main trend to up.
The main range is 35405 to 30574. Its retracement zone at 32990 to 33560 is resistance. This zone stopped the buying at 33255 on June 3.
The short-term range is 30574 to 33255. The market is currently trading on the weak side of its retracement zone at 31915 to 31598, making it resistance.
Daily Swing Chart Technical Forecast
Trader reaction to the short-term Fibonacci level at 31598 is likely to determine the direction of the E-mini Dow into the close on Friday.
Bearish Scenario
A sustained move under 31598 will indicate the presence of sellers. If this move creates enough downside momentum, we could see a near-term acceleration into the main bottom at 30574.
Bullish Scenario
A sustained move over 31598 will signal the return of buyers. This could trigger a quick rally into the short-term 50% level at 31915.
Overtaking 31915 will indicate the buying is getting stronger. This could trigger a late session retracement into a minor pivot at 32296.