Not feeling like trading the U.S. dollar ahead of this week’s U.S. data releases?
Let’s take a closer look at the S&P 500 stock index, which saw a pullback following stronger-than-expected U.S. manufacturing PMIs and Fed Chairman Powell recently promoting a more “prudent” approach to cutting interest rates.
S&P 500 Index (US500) 1-hour Chart by TV
The stock index has been in an uptrend all year thanks in part to AI-related optimism and expectations of the Fed cutting its interest rates this year (maybe as early as June!) The S&P 500 index also respected a steeper trend line support starting late March though it has pulled back after hitting the 5,275 highs.
This week’s U.S. data releases could help tell if the US500 can extend its uptrend. We know that yesterday’s better-than-expected U.S. manufacturing PMIs supported Fed Chairman Powell’s preference for a more “prudent” approach to interest rate cuts and limited the U.S. stocks’ bullish prospects.
Today’s U.S. JOLTS job openings and tomorrow’s ISM services PMI reports are generally expected to print slightly weaker readings in March.
Weaker U.S. labor market prospects could encourage the Fed to bring forward its interest rate cut schedule. This may lead to bullish candlesticks for the US500 and possibly rise by a full daily ATR move all the way to the 5,275 previous highs and R1 Pivot Point line.
We’re not expecting immediate gains for the stock index, however. With more traders coming in from a long weekend, we may still see a continuation of yesterday’s downswing before seeing sustained buying pressure.
A dip to the 200 SMA or the 5,215 R1 Pivot Point zone is still on the table until we see a fresh risk-friendly catalyst for U.S. stocks.
With a pretty broad range of potential catalysts and with the US500’s tendency to make extended moves once it finds a direction, waiting for the markets to digest the U.S. data releases and pick a direction would help traders who are looking to take advantage of this setup.