Nasdaq futures remained range-bound overnight as traders awaited key economic catalysts: the latest CPI data release and remarks from Federal Reserve Chair Jerome Powell. Market activity in the Asian and European sessions was muted, with price action confined within Tuesday’s value area, a sign of caution ahead of the data.
Pre-Market Positioning and Inflation Reaction
During the European session, Nasdaq futures found support at 21,736, aligning closely with Tuesday’s value area low (VAL). Buyers stepped in at this level, gradually driving price higher to test both Tuesday’s value area high (VAH) and last week’s (VAH) just ahead of the inflation report.
However, when the inflation data came in slightly above consensus, the market reacted sharply. A 330-point sell-off followed almost instantly, with price plunging to a session low of 21,510, just shy of the yearly VWAP. This aggressive move signalled a swift repricing as traders adjusted to the inflation surprise.
Powell Reaffirms Cautious Stance on Rate Cuts
After the inflation-driven volatility, markets shifted their focus to Fed Chair Jerome Powell’s speech, where he reaffirmed a cautious approach to monetary policy.
- The Fed remains hesitant to cut rates amid persistent inflation concerns.
- Inflation is still above the 2% target, making immediate rate cuts unlikely.
- The economy’s resilience allows the Fed to be patient rather than rushing into easing measures.
- While a soft landing remains the goal, rate cuts are expected to proceed more gradually than markets had anticipated, ensuring inflation is fully contained.
Nasdaq Futures Rebound Amid Technical Strength
Despite the aggressive initial drop, Nasdaq futures once again showed resilience, rebounding sharply from the session low. The recovery gained traction throughout the New York session, reclaiming the monthly VWAP with ease.
Price action then tested Tuesday’s value area low, where an initial rejection briefly stalled the rally. However, buyers-maintained control, eventually pushing back into Tuesday’s value area and consolidating for the remainder of the session.
As of writing, Nasdaq futures are making another attempt to break above last week’s value area high, signalling that buyers remain firmly in control following the post-data recovery.
