May Inflation Strengthens Fed's Path to Hold Rates Steady

The May inflation data reinforces the Fed's path to keep interest rates steady, potentially dampening risk appetite by weakening market expectations for rate cuts. The SPX closed at 7386, down 2.7% on the day, indicating sustained selling pressure. The RSI falling to 42.9, below the neutral zone, suggests weakening short-term momentum. The MACD line remaining below the signal line and in negative territory confirms the bearish trend. The price trading below the 20- and 50-day moving averages further weakens the technical outlook.

NDX has declined 4.7% in the last 24 hours to 29,083, with technical indicators pointing to weakness. The RSI has fallen below the neutral zone to 41.3, while the MACD remains in negative territory below the signal line. The price is trading just below the 20-day SMA (29,232) and well below the 50-day SMA (29,989). May inflation data reinforcing the Fed's path to hold rates steady could continue to pressure tech stocks amid expectations of a prolonged high-rate environment. In the short term, selling pressure is likely to persist, though the decline may be limited in pace as the market has not yet entered oversold territory.

The news indicates that inflation supports the Fed's decision to keep interest rates unchanged. This situation does not provide a clear short-term direction for the DXY. Technical indicators are also giving mixed signals: the RSI is in neutral territory just below 50, the MACD is below the signal line but near zero, and the price is just below the 20- and 50-day moving averages. Therefore, a sideways movement can be expected in the short term.