FXCM’s USDOLLAR is on the move, looking to entrench a swing higher
USDOLLAR short-term analysis.
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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USDOLLAR short-term analysis.
The US 10-year yield is trading near 4.25%, at levels last seen at the end of 2022. The underlying driver is a strong US economy and the sense that the Fed will leave rates “higher for longer.” The strong US-10 year is having an impact on the spread between the US and Canadian 10-year bonds.
On Friday at Jackson Hole, ECB president Christine Lagarde said that EU rates will need to stay high “as long as necessary” to bring inflation down. At face value this sounds hawkish. However, the ECB needs to manage this in the face of a stagnating economy.
Fed Chair Powell’s delivery at Jackson Hole had a hawkishness to it. He said that “although inflation has moved down from its peak…it remains too high.” This comes after the Fed’s 11 rate hikes since the beginning of 2022, which has the target range currently at 5.25%-5.5%. At face value, this seems restrictive, however labour markets are still tight, and GDP is still growing at a fair pace.
Gold has a robust inverse relationship to the 10-year real yield. The current correlation coefficient on the daily timeframe is -90%. Yesterday, the real yield declined by 6.57%, which saw the yellow metal respond and appreciate on the day.
With just a week left of the month, the NAS100 August candlestick (blue arrow) shows interesting price action. Initially, the month was bearish, with bears taking the index down to the month low of 14,555. However, the bears lost control at this level with the bulls taking over. The bulls have pushed price back up to the 15,350 levels and remain in control. We caution that the monthly candle is…
Constrained economic activity in the Euro Area is negatively impacting the EURUSD and influencing ECB policy. As such, the currency pair is sensitive to economic releases. Whilst the central bank has inflation foremost on its mind, the level of Euro Area slowdown cannot be ignored. Flash PMIs that were released today continue to indicate a challenging environment, implying contraction in both the manufacturing and services sectors.
The 10-year real yield and dollar were showing signs of moderation earlier today. However, both instruments’ trend-following indicators have now crossed up.
Microsoft presented a fresh proposal regarding the acquisition of Activision Blizzard. This move comes as a response to the initial proposition being turned down by regulatory authorities in the United Kingdom. The new deal includes a series of compromises and accommodations.
The 2-year yield serves as a good general proxy for monetary policy direction. The top chart shows the German 2-year yield, representing European monetary policy, and the chart underneath is the US 2-year yield. Since mid-July, the German 2-year has been trending down and the US 2-year has been trending up.
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