US CPI slowdown boosts Dow Jones index and market optimism

The Dow Jones surges near 34K and expected to continue with an upward trajectory

By Nadia Elbilassy | @Nadia Elbilassy | 14 April 2023

DOW JONES Technical analysis
  • CPI slows down to 5% trigger market optimism

  • Markets price in that the tightening cycle is coming to an end

  • The primary support for the Dow is near 33,300 points

The DOW post CPI figures

After the Fed meeting minutes were released, the Dow Jones index closed notably higher in the fourth session of the week. Despite the Fed portraying a dim outlook suggesting that the ongoing banking sector crisis could lead to a recession this year.

Newly released data on Wednesday revealed a decrease in the US Consumer Price Index's annual growth rate to 5%, down from the previous reading of 6%. Conversely, the core index, which excludes energy and food prices, rose to 5.6% during the same period, up from the previous reading of 5.5%. Despite inflation remaining significantly above the Federal Reserve's 2% target, the recent data indicates a continued deceleration in recent months.

This has solidified market expectations that the Federal Reserve's monetary tightening policy, implemented since last year to combat high inflation, is nearing its end.

At the close of the trading session, the Dow Jones index rose by about 1.18% to close at the level of 34,000 points.

Important key levels for the Dow Jones index

The Dow Jones index has surged close to the 34,000-pivot level and is expected to continue its upward trajectory, testing significant resistance levels on a daily basis at around 34,300/500.

This level has been a critical area for the index as it has retreated from it multiple times. Thus, if prices manage to break through and remain stable above this level, it could lead to further upward momentum towards the 35,000-point level, and possibly even surpassing it to test the resistance level of 35,400 points.

Nonetheless, if the Dow Jones index is unable to break through the resistance level of 34,500, it may retreat and test the support level of 33,600 points, which is crucial for maintaining the upward trend. Falling below this level could result in further declines, with the next support level being around 33,000 points. If the index breaks this level, it may continue to decline and test the critical support level of 32,600 points.

DOW JONES Technical analysis