Fed's First Rate Hike Since 2023 Anticipated

Expectations of a Fed rate hike are putting pressure on risky assets, increasing downside risk for the SPX. Technical indicators are already weak: RSI at 38.6 is in the neutral-to-lower zone, MACD is below the signal line, and the price is trading below the 20- and 50-day moving averages. This supports a short-term bearish trend. However, some of the rate hike expectation may already be priced in; therefore, a limited pullback is more likely than a sharp decline. Nevertheless, the news flow and technical picture highlight downside risk.

DXY is currently at 99.73, showing a positive trend with a 0.19% increase over 24 hours. With an RSI of 62.6, it has not approached overbought territory, the MACD is above the signal line, and the price is above the 20 and 50-day moving averages. The Fed's rate hike expectation is a strong supporting factor for the dollar; such news typically triggers upward movement in DXY. However, the possibility that the expectation is already priced in and potential 'buy the rumor, sell the fact' dynamics could limit upside potential. In the short term (1-3 days), I expect a moderate upward trend, but volatility may increase as the news becomes official.

Fed rate hike expectations could pressure risky assets, particularly negative for the tech-heavy NDX. Technical indicators are already weak: RSI at 35.9 is near oversold territory but no reversal signal yet, MACD is negative and below the signal line. Price is trading below the 20 and 50-day moving averages, confirming the short-term downtrend. Selling pressure may increase with the news, but oversold conditions could lead to a limited rebound. Nevertheless, the overall outlook is bearish.

The Fed's rate hike expectation is a negative factor for gold, as rising interest rates increase the opportunity cost of holding gold and could strengthen the dollar. However, the latest close at 4339.83 showed a 1.32% increase in 24 hours, and the RSI at 41.7 is near oversold territory, increasing the likelihood of a short-term rebound. The MACD is in negative territory and below the signal line, indicating that downward momentum may continue. Trading well below the SMA20 and SMA50 also supports a weak technical outlook. The impact of the news may be limited as the market may have largely priced in the rate hike; nevertheless, short-term downward pressure is expected.