Dow Jones struggles near 40,000 as China retaliates, targeting Boeing

• Trump vows new tariffs on pharmaceuticals, warns EU "took advantage" of US; auto aid also under consideration.
• China halts Boeing jet deliveries, targets US aircraft parts as trade war expands beyond electronics.
• Dow's upside capped near 40,500; a drop below 40,000 could expose 39,877 and deepen bearish pressure.

The Dow Jones Industrial Average (DJIA) advanced earlier in the North American session by 0.3% or over 120 points. Nevertheless, optimism among investors faded recently, even though the CBOE Volatility Index (VIX) fell below 30 after spiking to a high near 60 last week.

DJIA trims gains after early rally; volatility eases but trade tensions and tariff risks keep bulls cautious

US President Donald Trump announced that they will soon impose tariffs on imported pharmaceuticals and reiterated that the EU has been taking advantage of the US. Trump added that he is looking to help car companies and that some things will come up.

Meanwhile, China ordered domestic airlines to freeze all new Boeing jet deliveries and halted purchases of US aircraft parts. Last week, Washington excluded major electronic categories and smartphones from the 145% duties on Chinese goods. Nevertheless, comments from US President Trump and Commerce Secretary Howard Lutnick suggested these exemptions might only be temporary.

The US economic docket is light, with Retail Sales expected to be released on Wednesday. Traders should be aware that the trading week will be shortened due to the Easter holiday on Friday.

Dow Jones price forecast

The Dow remains downward biased even though the index has clung to the 40,000 figure, underpinned mainly by an upbeat market mood. However, US President Trump comments could exert downward pressure and pave the way for a 'bearish' continuation below the 40,000 figure.

A drop below the latter will expose the April 14 low of 39,877, followed by the April 7 swing low of 36,480. On the other hand, if bulls stepped in and push prices past 40,500 the immediate level to challenge will be April 10, high at 40,909. Once cleared, 41,000 is up next.