The weekly FXCM USD basket, USDOLLAR, is contending with overhead resistance around the 12,800 level (red shaded horizontal). However, the stochastic has moved above 80 into its upper quintile (green rectangle). This level is a strong momentum position, and the longer the stochastic is at current measures, the greater the potential for higher USDOLLAR prices. However, we note that the bullish momentum may be waning if the indicator slips below 80.
Fed Officials and 10Yr. Treasury
The movement by stochastic above 80 is not surprising given comments yesterday by Fed Governor Lael Brainard and San Francisco President Mary Daly. Both see higher rates ahead, with Brainard suggesting a bold reduction in the Fed's balance sheet. This hawkishness sent the US10 Yr. Treasury higher, with the current yield at 2.64%, just shy of our measured move. The RSI is near to but not overbought. Given that Bullard is due to speak tomorrow at an event hosted by the University of Missouri, it will be interesting to see how the 10-Yr finishes for the week. Bullard was the lone dissenter at the last FOMC meeting, advocating for 50bps instead of the 25bps increase.
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.