Dow Jones forecast: US stocks hold steady ahead of tariffs announcement

Dow Jones forecast: US indices were trading higher across the board, shaking off a weaker start for the index futures, as traders speculated, thanks to a CNBC post, that Donald Trump’s reciprocal tariffs set to be announced shortly will not go into effect until possibly April 1, meaning plenty of time for affected nations to strike a trade deal. In addition, sentiment was already positive on optimism about the Ukraine war potentially ending. Following yesterday’s hot US CPI report, we also had a stronger set of PPI inflation data that was overshadowed by hopes tariffs won’t be effective immediately. The focus will turn to PPI inflation and jobless claims data, with retail sales to come Friday.

Ukraine war optimism lifts DAX to new highs

In Europe, the DAX hit yet another new all-time high with markets across the Eurozone and the single currency both showing relative strength. Risk appetite improved further since yesterday afternoon as attention turned to President Donald Trump’s discussions with Russia over a potential peace deal for Ukraine. In a phone call with Russian President Vladimir Putin, Trump agreed to begin negotiations aimed at ending the conflict.  While no concrete agreements have been announced, markets—particularly in Europe—reacted positively to the prospect of diplomatic progress. There is still a long way to go, but the mere fact that talks are commencing has been reflected in the pricing of European assets. A resolution to the conflict could remove war-related costs, especially in the energy sector, while reducing uncertainty and potentially boosting business confidence—an outcome that would be particularly beneficial for Europe’s largest economies.

Yields a potential tailwind for Dow Jones forecast

The improved risk appetite in the Eurozone somewhat helped to offset disappointment over fading hopes for imminent US interest rate cuts, after inflation data came in hotter than expected. Fed President Jay Powell acknowledged that more work is needed to be done on inflation, and the markets pushed back their rate cut expectation to December.

With yields remaining elevated (although reversing some of yesterday’s moves), this is something that may hold back US stocks from showing the same level of enthusiasm as before. In fact, if you look at major US indices, especially the more tech-heavy ones, you will note that they haven’t gone anywhere since December.

Technical Dow Jones forecast: Key levels to watch

Source: TradingView.com

From a technical point of view, the major US indices, including the Dow Jones chart, remain largely trapped within their respective ranges, struggling to breach new all-time highs—unlike their European counterparts, where the DAX has once again surged to fresh record territory. A mixed bag of corporate earnings, ongoing trade uncertainty, and rising yields have certainly taken the edge off the prior rally, yet the broader bullish trend remains intact—until the charts suggest otherwise.

As for as the Dow is concerned, well it is currently maintaining its footing above the 21-day exponential moving average, with short-term support emerging around 44,200. As long as this level holds, the short-term bias remains skewed to the upside. However, a decisive daily close beneath this zone could open the door to a more pronounced retracement, with the next significant support level not appearing until 43,385 area. A deeper pullback could even see the index testing the long-standing bullish trend line that has been in place since October 2023, which currently converges around the 42,500–42,600 region. 

Conversely, should the aforementioned support hold firm, the Dow could finally muster the strength for a breakout above key resistance in the 44,800–45,000 zone. This region has repeatedly been tested and defended, but recent encounters have only led to moderate selling pressure. The more a key resistance level is tested, the greater the likelihood of a breakout.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

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