Probability of Fed Rate Hike Increases

An increased likelihood of a Fed rate hike could put pressure on risk assets and strengthen the selling trend in cryptocurrencies in the short term. Although JST's 24-hour change is positive, the RSI is at 49.5, in neutral territory, and below the MACD signal line, indicating weak momentum. The price is trading very close to the SMA20 and SMA50, suggesting no clear direction. While the probability of a downward break increases due to news impact, the current technical picture is mixed. Therefore, I assess the downside with only limited confidence.

The increased likelihood of a Fed rate hike is putting pressure on risk assets, raising short-term downside risk for the SPX. However, the RSI is at 27, in oversold territory, and the price is trading below the SMA20 and SMA50, indicating that some of the decline is already priced in. The MACD is negative and below the signal line, momentum is weak. Nevertheless, oversold conditions could trigger bargain hunting and limit the decline. Overall, the news flow is bearish, but technical indicators also suggest the possibility of a limited short-term rebound.

The increased likelihood of a Fed rate hike is a negative factor for the growth-stock-heavy NDX in the short term. Technical indicators are already weak: the price is below the SMA20 and SMA50, and the RSI at 34.6 is near oversold territory but has not yet shown a reversal signal. The MACD is negative and below the signal line, with downward momentum. If the news strengthens rate hike expectations, selling pressure could increase. Nevertheless, the low RSI level keeps alive the possibility of a limited rebound; therefore, I anticipate a downward bias rather than a definitive decline.

DXY is currently at 98.94, showing a positive trend with a 0.12% increase over the past 24 hours. With an RSI of 58.4, it has not approached overbought territory, and it is trading above the MACD signal line and slightly above the SMA20 and SMA50, indicating short-term upward momentum. An increased probability of a Fed rate hike is generally a positive catalyst for the dollar index. However, the impact may be limited due to the possibility that the news is already priced in and technical indicators not providing a strong directional signal. I expect an upward movement in the 1-3 day horizon, but this signal is moderately reliable.