The likelihood of aggressive interest rate hikes in 2026 has declined following the release of US employment data, which pointed to a noticeable slowdown in the labor market. This weakness could encourage the Federal Reserve to adopt a more cautious approach as it balances the need to contain inflation with maintaining labor market stability. As a result, market expectations for a rate hike at the September meeting have fallen to around 46%.

Attention is now shifting toward inflation data, particularly the Consumer Price Index (CPI) and Producer Price Index (PPI). Despite the sharp rise in oil prices, around 24% from the beginning of July to their peak during the month, which could temporarily feed into inflation, the subsequent decline in energy prices may ease these pressures going forward, especially if the rise in inflation proves to be driven by a temporary energy-price shock rather than sustained demand growth.

Meanwhile, Kevin Warsh highlighted the importance of capital expenditure on artificial intelligence in supporting U.S. economic growth. This could provide an additional reason for the Federal Reserve to remain cautious, as aggressive rate hikes could weigh on one of the most important sectors of the US economy.

Geopolitical tensions and their developments will also remain closely monitored in the coming period, given their direct impact on inflation, monetary policy, and broader economic indicators.

Figure: Nasdaq, Time frame: H4, Source: TradingviewFigure: Nasdaq, Time frame: H4, Source: Tradingview

From a technical perspective, on the four-hour timeframe, the Nasdaq remains in an overall downtrend, having recorded a new low at 29,123.19 after breaking below the previous lower high indicated by the green arrow.

Regarding the current price action, the index is trading near a supply zone that coincides with the 78%–88% Fibonacci retracement area, which could pave the way for further downside toward 29,318.

Another important signal for traders to monitor is the Relative Strength Index (RSI) falling below the 50 level, which could support further bearish momentum in the Nasdaq.

To maintain the bearish outlook over the short to medium term, the index would need to remain below 29,950 and avoid forming a new high above this level.