Dow Jones recovering? Four keys to watch, Nasdaq at resistance, US CPI in focus today

Thanks to the high price of crude and the threat of interest rate rises by the Fed, the Dow Jones Industrial Average has been suffering compared to other US indices.

Are we seeing a recovery?

In today’s Market Outlook, let’s take a look at Forex trading on Gold, XAUUSD, EURUSD, AUDUSD, GBPUSD, Brent Crude Oil, the NASDAQ and the Dow Jones Industrial Average.

We have been waiting for the Dow Jones Industrial Average to pick up and catch up to the others, but let’s take a closer look.

And the NASDAQ appears to be consolidating at resistance.

But we need to watch some key elements.

Firstly, the high price of crude oil signals worse inflation, which the Dow Jones does not like, even though we see Brent Crude in a bearish rising wedge.

Higher inflation means that the Fed will be more likely to raise interest rates later this month.

Secondly, US Treasury yields are still high, making investment in equities less attractive.

Thirdly, this week and next see corporate earnings reports, with this week mostly financials and next week being 3M, IBM, and American Express.

Obviously, strong earnings reports will be good for investors.

And, finally, look out for tonight’s CPI figures, which will also give the Fed some direction regarding interest rates.

And tomorrow’s PPI.

So, we will be looking for an opportunity to enter the markets AFTER the news.

Up until recently, we have relied on USD strength to give us a common direction, but that may be waning.

In 2 weeks’ time, the Fed will be voting on the next interest rate so it is entirely possible we will see consolidation and indecision.

Meanwhile, we have a range trading opportunity on GBPUSD after a long bear run.

So, if the news drives price higher, watch your indicators and the spread and look for a short entry.

We have a bullish rebound on AUDUSD so, is training short a good idea?

If we look at the daily chart, we see a long bear run with price at a key level of exactly $0.70, so we need to see a break either way.

EURUSD looks even easier to read, as price is in a continuing downtrend, at the upper trend line, and the stochastic oscillator very overbought.

And, of course, Gold is still bearish, so we will look for a pullback after the news.

And check all the other USD pairs before tonight’s CPI event.

That’s all for now.

CFDs and FX are leveraged products, and your capital may be at risk.