Dow Jones (DJIA) Technical: Resting at key support ahead of FOMC, watch the US Treasury yield curve to trigger a bullish move

[Ben Graham]

This is a follow-up analysis and a timely update of our prior publication, “Dow Jones (DJIA) Technical: Poised for a potential bullish breakout as US CPI looms”, published last Thursday, 11 September 2025.

The price actions of the US Wall Street 30 CFD Index (a proxy of the Dow Jones Industrial Average futures) have staged the expected bullish breakout above the minor “Ascending Triangle” range resistance at 45,780 and rallied by 1.3% to hit a fresh all-time intraday high of 46,140 on last Friday, 12 September 2025, during the early Asian session.

Thereafter, the US Wall Street 30 CFD Index’s minor/short-term bullish momentum fizzled out and staged a corrective pull-back of -1.1% to print an intraday low of 45,645 on Tuesday, 16 September 2025, ahead of today’s FOMC monetary policy decision outcome and the release of the latest Fed economic projections (dot plot).

Fig. 1: Performances of S&P 500, Nasdaq 100, DJIA & Russell 2000 from 12 Sep 2025 to 16 Sep 2025 (Source: MacroMicro)

So far, the Dow Jones Industrial Average has both lagged and outperformed its peers from last Friday, 12 September, to this Wednesday, 16 September. The DJIA shed -0.2%, and in contrast, the mega-cap heavy S&P 500 and Nasdaq 100 recorded gains of 0.3% and 0.8% respectively towards fresh all-time highs. Even the small-cap Russell managed to squeeze out a modest positive return of 0.2% (see Fig. 1).

A key macro factor and its intermarket relationship hold the key to the short to medium-term performance of the Dow Jones Industrial Average. More details below.

A re-steepening of the US Treasury yield curve is needed to revive the bulls of Dow Jones

Fig. 2: DJIA, momentum, value factors, US Treasury yield curve major trends as of 16 Sep 2025 (Source: TradingView)

The Dow Jones Industrial Average tends to be viewed as a more “value-oriented” barometer benchmark US stock index due to its higher weightage of value-related sectors, such as Financials, over the Nasdaq 100; the Financials sector has a weightage of 27% in the DJIA.

One of the key drivers that allows the DJIA to stage a bullish breakout on 22 August 2025, above its former all-time high of 45,074 printed on 4 December 2024, is a macro factor (undiversifiable risk), the bullish steepening of the US Treasury yield curve (10-year minus 2-year), which, in turn, also reinforced the bullish breakout of the ratio chart of the S&P 500 Enhanced Value ETF (35% weightage in Financials)/S&P 500 ETF (see Fig. 2).

A bullish steepening of the US Treasury yield curve indicates short-term interest rates are falling at a faster pace than long-term interest rates due to an accommodating monetary policy environment undertaken by the Fed.

Hence, a US Treasury bull steepening environment tends to benefit the US Financials, especially in wholesale banking, as net interest margins expand, in turn, triggering a positive feedback loop back into the Dow Jones Industrial Average (heavily weighting in the Financials sector).

The recent pull-back in the DJIA since last Friday, 12 September, has moved in line with the flattening of the US Treasury yield curve (10-year minus 2-year). Interestingly, the flattening process of the US Treasury yield has stalled at a major ascending support, and a re-steepening motion seems to be in progress as it staged a bounce from 0.48% on 11 September 2025 to 0.52% on Tuesday, 16 September 2025.

The further re-steepening of the US Treasury yield curve will likely hinge on today’s release of the Fed’s latest economic projections and Chair Powell’s press conference, both of which will shape market expectations for monetary policy.

Should the Fed strike a dovish tone that prompts markets to price in more than the three rate cuts currently anticipated for 2026 (latest CME FedWatch tool data), the yield curve may resume its bull-steepening trend, in turn supporting the next bullish impulsive move in the DJIA.

Let’s now focus on the short-term (1 to 3 days) trajectory and key technical levels to watch on the US Wall Street 30 CFD Index

Fig. 3: US Wall Street 30 CFD minor trend as of 17 Sep 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

The minor corrective pull-back from last Friday, 12 September 2025, may have reached its terminal point for a potential bullish reversal.

Maintain a bullish bias on the US Wall Street 30 CFD Index with 45,780/45,690 as key short-term pivotal support. A clearance above 46,180 adds impetus to the start of another bullish impulsive up move sequence for the next intermediate resistances to come in at 46,365/46,400 and 46,570 (Fibonacci extension) (see Fig. 3).

Key elements

• The recent pull-back of the US Wall Street 30 CFD Index has started to stall at the lower boundary of the minor ascending channel in place since the 1 August 2025 low.
• The 45,780/45,690 key short-term pivotal support also coincides with the pull-back for the former minor “Ascending Triangle” range resistance
• The hourly RSI momentum indicator has staged a rebound after it reached its oversold zone on Tuesday, 16 September 2025, which suggests that the recent bearish momentum has eased.

Alternative trend bias (1 to 3 days)

A break below the 45,690 key short-term support invalidates the bullish reversal scenario on the US Wall Street CFD Index.

A further extension of the minor corrective decline may materialise to expose the next intermediate supports at 45,425 and 45,290/45,175.

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