Market reactions to the dovish FOMC statement and projections overnight were generally negative, except NASDAQ. DOW closed down -1.04% while S&P 500 dropped -0.53%. But NASDAQ extended the record run and rose 0.67% to 10020.35. 10-year yield extended this week’s steep reversal and closed down -0.081 to 0.748.
Nevertheless, it should be noted that both DOW and S&P 500 are both kept well above the near term gap bottoms (last Thursday’s highs) of 26384.10 and 3128.91 respectively. There is no indication of topping yet. NASDAQ’s rally is still in progress with solid momentum. If trading could sustained above 10k handle, NASDAQ might target 138.2% retracement of 9838.37 to 6631.42 at 11063.42 before making a top.
10-year yield’s break of 55 day EMA suggests that last week’s rebound is all over. It’s likely heading back to prior range between 0.55 and 0.70, which is not far away. TNX would likely settle there without further decline. If that’s the case, USD/JPY would be dragged down slightly further for the near term, but downside should be relatively limited.