The daily USDOLLAR chart is between the upper blue and red bands in its bullish area. Moreover, its stochastic is above the 80+ levels (red rectangle), suggesting a robust underlying momentum. The longer this is maintained, the greater the likelihood of further appreciation.
The hourly chart's EMAs and stochastic have crossed positively (black ellipses). Therefore, momentum will support the greenback if the EMAs develop angle and separation and the stochastic moves into its upper quintile (blue arrow).
Fed Chair Powell's address on Friday was hawkish, which should support the dollar. To this end, real rates have been pushing up over the last hour. The correlation between the USDOLLAR and real rates is a strong 0.78. Accordingly, if the real rate continues on its current trajectory and this relationship carries, the USDOLLAR should have yield support, with both moving into their respective hourly bullish areas.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.