Dow Jones & Nasdaq 100: Carry Trade Risks Test US Futures Pre CPI Report
Softer-than-expected inflation figures would likely boost expectations of an H1 2026 Fed rate cut. While a more dovish Fed rate path would increase risks of a yen carry trade unwind, lower borrowing costs would have a longer-term positive effect on demand for US stock futures. For context, lower borrowing costs can boost profitability and stock valuations, overshadowing the short-term effects of a yen carry trade unwind.
Beyond the data, traders should closely track comments from FOMC members. Views on the labor market, the inflation data, and monetary policy will influence risk sentiment.
According to the CME FedWatch Tool, the probability of a March Fed rate cut fell from 23.2% on February 5 to 8.9% on February 12. Meanwhile, the chances of a June cut dropped from 75.0% to 64.6%. Market sentiment toward the Fed’s policy outlook remains a key driver for US stock futures.
Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500
Despite Friday morning’s gains, the Nasdaq 100 E-mini and the S&P 500 E-mini traded below their 50-day EMAs, while holding above their 200-day EMAs. The EMA positions indicated a bearish near-term, but bullish longer-term outlook. Meanwhile, the Dow Jones E-mini remained above its 50-day and 200-day EMAs, signaling a bullish bias that aligns with positive fundamentals.
Near-term trends will hinge on US economic data, central bank rhetoric, earnings, and geopolitical tensions. Key levels to monitor include:
Dow Jones
- Resistance: the February 10 record high of 50,611 and then 51,000.
- Support: the 50-day EMA (48,980), and then 48,500.