Fed-White House Tensions Ease as Economic Data Strengthens Market Sentiment

Key Takeaways:

*Powell’s fiscal defense and Trump’s reassurance soothed concerns over monetary policy interference.

*Retail sales rose 0.6% and jobless claims fell to 221,000, signaling economic strength.

*S&P 500 and Nasdaq hit record highs as risk appetite returned amid political and macro tailwinds.

Market Summary:

TA potential rift between the Federal Reserve and the White House showed signs of mending after Fed Chair Jerome Powell addressed concerns regarding the renovation costs of the central bank’s Washington headquarters. Powell underscored the Fed’s commitment to fiscal responsibility, clarifying that the project involved essential safety upgrades and hazardous material remediation—measures necessary to maintain operational integrity.

In a conciliatory move, President Trump dismissed recent speculation about ousting Powell before his term concludes, reaffirming his support for the Fed’s independence as a cornerstone of dollar stability. The de-escalation helped alleviate market anxieties over political interference in monetary policy.

The improved political backdrop coincided with a batch of robust economic data, further lifting investor confidence. U.S. retail sales surged 0.6% month-over-month, marking a strong rebound from the prior month’s -0.9% contraction. Labor market resilience also remained evident, with initial jobless claims dropping to 221,000—below expectations and the previous week’s 228,000.

The combination of receding political risks and encouraging macroeconomic indicators fueled a broad-based rally on Wall Street. The S&P 500 and Nasdaq Composite closed at all-time highs as risk appetite returned, with markets also buoyed by the administration’s more measured tone toward China in ongoing trade discussions.

With monetary policy tensions cooling and economic fundamentals holding firm, the focus now shifts to upcoming inflation data and its implications for the Fed’s rate path. Should the positive momentum persist, equities could extend their record-setting run in the near term.

Technical Analysis 

DXY H4: 

The U.S. Dollar Index surged to a fresh multi-month high of 98.96 before retreating nearly 0.6% amid signs of a technical correction. Despite the pullback, the index continues to trade within its upward channel that began from the July lows, maintaining a broader bullish bias.

Momentum indicators, however, point to potential near-term weakness. The Relative Strength Index (RSI) has cooled off from overbought territory, while the MACD has formed a bearish crossover at elevated levels—both signaling that a technical retracement may be underway.

Traders should remain vigilant for signs of a short-term trend reversal. A failure to hold above the key support level at 98.10 could mark a significant bearish shift for the greenback’s momentum.

Resistance Levels: 99.20, 100.30
Support Levels: 98.15, 97.20

Nasdaq, H1

The tech-heavy Nasdaq extended its bullish run, closing at a fresh all-time high above the 23,000 mark. However, the momentum showed signs of fatigue late in the session, with price action turning sideways—hinting at a potential short-term technical pullback.

The recent rally carved out a fair value gap (FVG) around the 23,050 level. Holding above this zone would reinforce the bullish structure and signal continued upward momentum.

From a technical standpoint, the Relative Strength Index (RSI) remains anchored in overbought territory, while the MACD continues to edge higher—both suggesting that bullish momentum remains intact, albeit stretched in the near term.

Traders may look for consolidation or a brief correction before the index attempts a fresh leg higher.

Resistance Levels: 23,205.00, 23,315.00
Support Levels: 23,020.00, 22,900.00