USDOLLAR is bid as we head into the US session; Biden to meet with Powell


On the left, we show FXCM's weekly USDOLLAR basket. Noteworthy, the last two weeks show a decline. However, this pullback normalised the RSI, which was overbought (green rectangle). However, the stochastic, a measure of underlying momentum, remains in its upper quintile. As a result, the USDOLLAR basket trades in its strength zone between the upper blue and red bands. Together, this suggests a "dip in an uptrend" scenario.

On this right is the USDOLLAR's H4 chart. The trend-following EMAs and the momentum-based stochastic have crossed bullishly (black ellipses). If the hourly oscillator moves into its upper quintile (red rectangle), the dollar will be moving upwards, benefitting from a potential yield increase.

Interest rate policy certainly is in the spotlight, with President Biden meeting Fed Chair Powell today. This get-together comes a day after Fed Governor Waller's hawkish speech. Moreover, with Beijing and Shanghai reopening after a lengthy lockdown period, further demand-side pressure on oil is a concern in an already worrying and potentially stagflationary environment.

Finally, the market will focus on the OPEC+ meeting on Thursday for signs of any relief. However, the odds are long here in the near term.

Russell Shor

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.


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