US Inflation Records Biggest Drop in Six Years: Is Trump's Plan Working?

The sharper-than-expected decline in inflation could strengthen market expectations for interest rate cuts and increase risk appetite in the short term. Although SPX closed just below its 20-day moving average (7549), the RSI at 48.6 in neutral territory and the MACD approaching its signal line suggest recovery potential. However, the impact of the news may be limited as the market may have already priced in such moves. A short-term upward move is likely, but excessive optimism should be avoided.

The sharper-than-expected decline in inflation could serve as a positive catalyst for the NDX by strengthening expectations of an interest rate cut. However, the NDX's RSI has fallen to 36, approaching oversold territory, and the price remains below both the 20-day and 50-day moving averages. The MACD line is below the signal line and in negative territory, indicating weak short-term momentum. While the news is positive, the weakness in technical indicators suggests any upside may be limited. Therefore, a slight short-term rise is possible, but confirmation is needed for a strong trend reversal.

The largest decline in inflation in six years could increase the likelihood of the US Federal Reserve cutting interest rates. This may lead to a depreciation of the dollar. Technically, the RSI is approaching overbought territory at 62, while the MACD has made a positive crossover below zero, though momentum appears weak. In the short term, the dollar index is expected to narrow within the 100.5-101 range and face downward pressure following the inflation news.