Fed Raises 2026 Inflation Expectation, Lowers Growth Forecast

The Fed's upward revision of its inflation expectations and downward adjustment of its growth forecast have heightened stagflation concerns, potentially suppressing risk appetite. The SPX closed below its 20-day moving average (7511), with the RSI at 48 indicating weakening in neutral territory. The MACD remains below the signal line, suggesting negative short-term momentum. However, the 50-day moving average (7435) stands as a nearby support level, and a decline to this level is possible. Selling pressure is expected to persist in the short term, but since the market has not entered oversold territory, the downside may be limited.

The Federal Reserve's upward revision to its inflation forecast and downward adjustment to its growth projection could intensify stagflation concerns and negatively impact risk appetite. Although the RSI on the NDX remains neutral at 56, the MACD has fallen below its signal line, indicating weakening momentum. While the price is attempting to hold just above the 20-day SMA, this news raises the risk of a downside breakout. Selling pressure is likely to increase in the near term, though a sharp decline is not expected.

The Fed's upward revision of its inflation expectation could bolster the DXY by strengthening the perception that interest rate cuts may be delayed. Technically, while the RSI at 66.5 approaches overbought territory, the MACD remains positively above zero. The price is trading above both the 20-day and 50-day moving averages, and the short-term uptrend remains intact. However, the downward revision in growth forecasts may limit safe-haven demand and curb the rally's momentum. Therefore, the upside expectation is supported with moderate confidence.