FUNDAMENTAL OVERVIEW The S&P 500 briefly probed below a major support on Wednesday following the FOMC decision as the market initially interpreted it as more hawkish than expected but eventually realised it actually wasn’t. As a reminder, the Fed hiked interest rates by 25 bps as widely expected in an unanimous decision. Moreover, the part saying that inflation remained elevated in part reflecting supply shocks was removed. The SEP showed an upward revision for growth and inflation, and downward revision for unemployment.The most important thing was the dot plot where the Fed projected just one more rate hike in 2026, with rates staying higher throughout 2027 before rate cuts coming in 2028. That was more dovish compared to market's pricing which saw one more rate hike in 2026 and two more in 2027. I think this shows that the Fed has low appetite for an extended tightening cycle. Fed Chair Warsh mostly repeated his Jackson Hole speech, but he was still seen as being more hawkish. I'm not sure why. Anyway, the market brought forward rate hike expectations for October, with the probability now standing around 50%. I guess that's because Warsh mentioned that they want to see a timelier return to the 2% target.After the initial overreaction got faded, traders started to position for a potential de-escalation in the Middle East after a few promising news, such as China privately asking Iran to use its influence over the Houthis to help contain the group’s military campaign against Saudi Arabia, as well as hopes for a broader de-escalation after the UN General Assembly, where Trump is expected to meet with Gulf leaders to discuss the next steps in the war with Iran and will also likely meet Iranian officials.A de-escalation would send oil prices lower, further easing inflation and rate hike concerns and ultimately support risk sentiment and the S&P 500.Economic data will also be important given the current market’s pricing. When positioning and market expectations become stretched, even a modest shift in the data can trigger a significant reversal. If US data starts surprising to the downside, expectations for aggressive rate hikes will likely be reduced, giving the stock market an additional boost. S&P 500 TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that the S&P 500 (CFD contract) probed below the major 7,580 support but eventually rebounded strongly and it’s now approaching a key downward trendline around the 7,715 level. We can expect the sellers to lean on the trendline with a defined risk above it to position for a drop back into the support. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into new record highs.S&P 500 TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we have an upward trendline defining the bullish momentum. If we get a pullback, we can expect the buyers to lean on the trendline with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the support next.S&P 500 TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, there’s not much we can add here as the two trendlines remain the key technical levels to watch. The red lines define the average daily range for today. UPCOMING CATALYSTSTomorrow, we have Trump meeting with Gulf leaders and potentially with Iran’s President at the UN General Assembly. On Wednesday, we get the Flash US PMIs. On Thursday, we have the Trump-Xi meeting. This article was written by Giuseppe Dellamotta at investinglive.com.