Last Friday, Fed Chair Jerome Powell outlined in his speech the central bank’s readiness to cut interest rates as early as September, at its next meeting. However, officials’ views on the matter are hardly unanimous. Some doubt the necessity of such a move, but Powell said that the Fed is in a difficult position, with the state of the US economy leaving the regulator little choice.
Persistent inflation, which remains higher than the 2% target and continues to rise, coupled with a weakening labor market, is the regulator’s key challenge. This ambiguous situation has divided Fed officials, heightening their concerns regarding the CPI and employment outlook for the coming months. Chicago Fed President Austan Goolsbee noted on the sidelines of the conference that current economic conditions in the US are complex, with multidirectional trends emerging.
From a technical perspective, the S&P 500 (SPX) is likely to break above $6,490, attempting to surpass its historical high. Before climbing to this level, the index will probably gather momentum from the support at $6,435. This scenario would provide a more favorable risk-reward ratio, with a tight Stop Loss order recommended at $6,425.
The overall recommendation is to buy SPX from the level of $6,435, with Take Profit at $6,490 and Stop Loss at $6,425.
The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
