US index futures declined, primarily reflecting the downturn in Europe, where a series of earnings-related fluctuations impacted various individual stocks and weakened overall market sentiment. In the United States, the US dollar demonstrated a notable recovery following a series of predominantly positive economic indicators released yesterday, alongside the minutes from the January FOMC meeting, which conveyed a marginally more assertive stance on inflation. This partially elucidates the observed retreat in stock prices, as the likelihood of an imminent rate cut has diminished. Nonetheless, the fundamental trend remains optimistic, despite the fact that US indices have lagged behind their European counterparts thus far this year. However, recent indicators of robustness in technology stocks suggest that the Nasdaq 100 may soon participate in the rally. Policymakers at the Federal Reserve have expressed their concerns regarding persistent price pressures, with multiple officials indicating that interest rates may be increased once more should inflation continue to exceed the target level. The minutes from the January meeting disclosed that information.

Interestingly, several participants expressed a preference for a more “two-sided” communication regarding future rate intentions — essentially, maintaining the possibility not only for cuts but also for additional hikes if inflation were to reaccelerate. This represents a nuanced yet significant change in tone. Recent U.S. data have, overall, exceeded expectations. Labour market indicators indicate that the downside risks to employment have diminished, thereby lessening the immediate necessity for rate cuts. Economic activity has demonstrated a notable degree of resilience. Today’s release of jobless claims, the Philly Fed manufacturing index, and pending home sales will once again put that narrative to the test. Friday’s PMI releases are anticipated to provide a pertinent overview of the momentum within the manufacturing and services sectors, warranting close attention. Thus far, nonetheless, “good” data have not been sufficiently robust to significantly contest expectations for eventual easing. Equities have consequently maintained a generally supportive stance. Market participants have slightly adjusted their expectations regarding rate cuts, with a growing consensus favoring a first reduction in July instead of June. A significant amount, naturally, depends on inflation, particularly considering the FOMC minutes. If price pressures persist in their decline, this may pave the way for a more timely adjustment — or possibly additional reductions later in the year. Consequently, the core PCE reading released on Friday, which is the Federal Reserve’s favored measure of inflation, assumes greater importance. The near-term trajectory may be influenced not only by rate expectations but also by the dollar and equities simultaneously. There has been considerable discussion regarding the deflation of the AI bubble, and it is indeed accurate that a select group of technology giants has exhibited underperformance this year.

However, if one removes the extraneous factors and examines the chart in isolation, the Nasdaq 100 has yet to validate that narrative. Importantly, the index has maintained its position above significant support — particularly the 24,500 level. This region has consistently demonstrated its significance over time. Each test has experienced a notably strong recovery. The rebound on 6 February was notable, characterized by a pronounced rally from that area and the emergence of a bullish engulfing candle. Since then, the momentum to the upside has exhibited a more consistent nature rather than one characterized by explosive growth. The observed upward movement was notable; however, it did not exhibit substantial continuation and diminished rather swiftly. The subsequent pullback exhibited a systematic nature — and crucially, it did not breach the low of that bullish engulfing candle, indicating that buyers continue to dominate price action. The current structure continues to exhibit a constructive outlook. A breach of the descending resistance trendline would bolster the bullish argument and may attract fresh technical buying interest.

On the upside, 25,060 is the level to monitor today. It was tested yesterday and demonstrated resilience. The specified area corresponds with the low of a previous candle that was breached to the downside last Thursday. A daily close above 25,060 would indicate a positive development. On the downside, near-term support is observed at approximately 24.75. For the short-term bullish structure to remain intact, that level must now hold and serve as a foundation for any additional upside this week. However, should the bullish trend line be breached and we fall below 24,500, increased volatility is likely, necessitating a re-evaluation of the bullish case at that point.