FXCM US.BANKS basket is building a positive momentum
The FXCM US.BANKS basket has moved into its bullish channel between the upper blue and red bands (top). Moreover, its stochastic (middle) is moving towards the 80+ levels (red arrow). If it hits and maintains, the positive momentum will likely be price supportive.
This price action is strange, given the inverted 10-2 yield curve. However, whilst Q3 earnings have declined due to lower deal activity, interest income has counted positively.
The bottom candlestick series shows the relative strength (RS) of the US.Banks basket and FXCM's SPX500 CFD. Here we see that the RS is also in a bullish channel.
Given that the market is forward-looking, this position suggests that the market may expect the yield curve to steepen. In this regard, we need to see a moderation in median CPI i.e. that sticky inflation is yielding - a prerequisite to a Fed pivot. If this happens sooner rather than later, US.BANKS may represent value at current levels.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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