FXCM's weekly dollar basket, USDOLLAR, has run into overhead resistance (shaded horizontal area). The basket has pushed upwards over the last three weeks but with only limited success. Last week, it reached a high of 12,402 before bears sold it down. As a result, this week's candle (still to complete) is an inverted hammer with a selling tail. Moreover, it is an inside week, i.e. it has a lower high and higher low than last week's candle. This candle denotes indecision.
The triple moving averages do show angle and separation. If this is maintained, bullish momentum is likely to increase the price. However, if the green fast moving average hinges, the upwards momentum may be waning into the resistance.
The bullish movement last week was off the back of the Fed's hawkish statement, and this week Fed Chair Powell stated that future hikes might be more than 25bps. However, after each impulse higher, the USDOLLAR retreated. This resistance to higher prices may be due to the threat of stagflation if oil continues higher. Stagflation will make monetary policy tricky to implement and may adversely impact economic growth if not managed correctly.
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.