The Dow held above key support but failed to resume its record-setting advance this week, even after a hawkish jobs report reset the Fed rate-hike debate. With the index consolidating below its all-time high, traders now look to the August CPI report on September 11 to decide the next move.
The Dow Jones remained within a consolidation range below its 54,749.47 record high this week, unable to force a fresh breakout despite a week of catalysts that pushed and pulled at risk sentiment. Buyers defended support, but they have not yet resumed the broader uptrend.
A Strong Jobs Report Reset the Debate
Friday's employment data delivered the week's clearest hawkish signal. Nonfarm payrolls rebounded from a revised 21K in July to 162K in August, far above the 58K consensus. Combined with June, the prior two months were revised 55K higher, removing much of the concern that had built around July's initially weak print.
The probability of a September Fed hike rose from 49.4% before the report to 59.4% after it. Yet that move only restored pricing to roughly where it stood a week earlier, before Fed Governor Christopher Waller's comments had pushed odds back toward an even split. Equities absorbed the repricing without a sharp reaction either way.
Dow Technicals Point to a Standoff
The Dow's near-term structure still favors another attempt higher while 52,696.27 support holds. A firm break above the record high would confirm uptrend continuation and target the medium-term channel ceiling, currently around 55,475. However, a loss of that support would argue that consolidation has turned into a correction of the advance from 45,057.28, opening the door to 51,049.37, the 38.2% retracement of that rise.
For now, equities are neither confirming a hawkish shock nor accelerating into fresh risk-on territory, leaving the index in the same holding pattern as the Dollar and Treasury yields.
CPI Now Carries the Deciding Vote
Waller has said his September vote hinges more on August CPI than on payrolls, meaning the strong jobs report raises the bar for holding rates without clearing the bar for an interest rate hike. If the September 11 CPI report shows inflation reversing higher rather than merely stalling, yields and the Dollar would gain a fundamental catalyst to break their own resistance levels, adding pressure on equities to resolve their standoff too.
Source: ActionForex
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