Global events are supporting the dollar
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FXCM's dollar basket, the USDOLLAR, has had a solid month (blue arrow). We note that its range from high to low is 458 points. This intensity is almost double the 5-month average true range (at 236 points), which has also kicked up (green rectangle). The RSI tends toward overbought (blue rectangle) but still has some room to move before registering as an excess. This month's candle has hit the upper red band, and the Bollingers themselves are diverging (black ellipses). This action is a sign of the expansion in volatility.
There is a confluence of fundamentals that are driving the greenback higher:
1. The Federal Reserve is looking to front-load its interest rate hikes in the coming months to stifle inflation.
2. Russia's invasion of Ukraine has caused supply shocks to key manufacturing inputs, and Russia has cut off the gas supply to Poland and Bulgaria.
3. Japan and China are easing policies, dealing with their growth issues.
Unless these show signs of change, the dollar seems supported in the medium term.
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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