Inflation concerns continue to support the US dollar while weighing on the Nasdaq as the US–Middle East conflict persists. Key US economic indicators are now in focus, with the potential to either reinforce or ease current market dynamics. Indicators that align with inflationary pressures and risk-off sentiment are likely to be more clearly reflected on the charts, while others may lag in fully capturing the impact of ongoing supply chain disruptions across energy, commodities, and fertilizers. These disruptions continue to fuel cautious, risk-off sentiment globally, alongside increasingly hawkish central bank expectations.
CNN Fear and Greed Index
Source: CNN
The CNN Fear and Greed Index remains in extreme fear territory, last seen in April 2025 during the “Liberation Day” and reciprocal tariff rhetoric that pushed global indices into a steep decline, followed by a sharp rebound to new highs. This environment is attracting investor interest in potential long-term dip-buying opportunities during periods of market stress.
Last year, key technical signals pointed to bullish rebound setups ahead of Trump’s comments, which triggered sharp recoveries. However, relying on such headlines alone may not be sufficient for long-term positioning if technical confirmation is lacking. Market sentiment is being driven by broader forces beyond US policy, extending to Middle East developments and global energy, commodity, and agricultural supply chains.
This sentiment is weighing more heavily on the Nasdaq compared to the Dow Jones, which has shown relative stability due to exposure to energy and defense sectors. However, a further rise in inflation expectations, reflected through continued dollar strength, could place broader pressure across all equity indices.
- German CPI rises to 2-year highs, 0.2% -> 1.1%, amid rising energy costs
- Eurozone Core CPI rises to 1-year highs near 2.55, up from 19%
Key Levels to Watch
- WTI: close above 110, below 89 (Click here for the Q2 2026 outlook)
- Dollar: close above 100.60, below 98
- Nasdaq: close above 23,500 - 24000, below 22,800
These levels represent key thresholds for potential structural shifts. A move above 110 in crude could extend inflationary pressures, reinforcing hawkish central bank expectations, supporting a DXY move above 100.60, and weighing on gold toward the 4200–4000 psychological zone. On the downside, a break below key support levels would reflect de-escalation dynamics, potentially reversing the geopolitical risk premium across markets.
DXY Outlook: Daily Time Frame – Log Scale
Source: Trading View
The US Dollar Index is trading near the upper boundary of its consolidation range, which has been developing since June 2025, while forming a potential double bottom pattern from the lower bound of the broader 2008–2026 uptrend.
The 100.50 level remains a key threshold. A confirmed breakout above this level on a daily or weekly close could open the path toward 101.80 and 104.40, reinforcing inflation expectations and a more hawkish central bank outlook. A move back below 98 would support a de-escalation narrative.
Nasdaq Outlook: 3-Day Time Frame – Log Scale
Source: Trading View
Nasdaq price action remains under pressure, trading below the range that formed between October 2025 and January 2026, and developing into a double top pattern that has yet to reach its full downside projection.
A break below the recent 22,800 lows would extend downside risks toward the 22,100–21,800 zone, aligning with the highs of 2024 and presenting potential dip-buying areas, similar to the setup seen in April 2025, as the weekly RSI approaches one-year oversold levels.
Bullish scenario:
A close back above 23,500, followed by a move above the 24,000 neckline, would reinforce bullish prospects toward 24,600, 25,800, and 26,000, respectively, reopening the path toward new record highs.
Written by Razan Hilal, CMT
Follow on X: @Rh_waves
