The Dow Jones 30 Futures (CME: YM) gained a handsome 2.56% from Friday’s lows as a return to risk sentiment drove risk assets higher.

The worst of the banking sector crisis seems to be over, as larger banks and authorities stepped up to ring-fence the industry. The latest step in the sector was the acquisition of loans and deposits of Silicon Valley Bank by First Citizens BancShares.

Traders will closely pay attention to this week’s U.S. Labour Market Report and PCE Index, the Federal Reserve’s (Fed) preferred inflation gauge, for signs of whether the Fed will continue its rate hiking path.

Technical

The Dow Jones 30 Futures have traded in a rangebound zone with declining volumes. Bulls and bears are likely disputing for control of the market at present. Support and resistance were established at the 31891 and 32990 levels, respectively.

With bulls on the front foot, price action is likely headed towards resistance at the 32990 level. Bullish traders will probably look to the 32990 level as a take-profit level. If price action breaks above the 32990 level on high volumes, it could signal bullish enthusiasm to raise the index. In this case, the next probable level of interest would be the 33495 level.

Alternatively, if bearish traders look to sell high, the 32990 level will likely be earmarked as an attractive level to sell following the rejection of the level with excess supply. Bearish traders will probably be enticed to aim for support at the 31891 level.

Summary

The key factors traders will consider this week are U.S. inflation and the strength of the Labour Market. With the PCE Index forecast to come lower on a monthly and yearly basis, the Dow Jones 30 Futures will likely be weighed down if the PCE Index Reading comes out hotter than expected. Traders may interpret a higher PCE Index as a chance for the Fed to extend its fight against inflation by hiking rates further.

Sources: Reuters, TradingView