USDOLLAR short-term analysis points to upwards bias
In yesterday's testimony before the House Financial Service Committee on Capitol Hill, Fed Chair Jerome Powell suggested a 25bps hike on 16 March. This increase comes as the financial market reel following Russia's invasion of Ukraine. Mr. Powell said that "[i]t's too soon to say for sure, but for now...we will proceed carefully along the lines of [the] plan" proposed before the Ukraine invasion (barrons.com). Inflation is at levels that necessitate the central bank intervention as per its price stability mandate. Moreover, the Fed chair suggested that the US economy is strong enough to withstand higher rates and that the labour market remains robust. This stance steadied Treasury yields and reflected in the greenback.
The left chart below shows the daily heikin ashi (HA) for FXCM's dollar basket, USDOLLAR. The HA is a trend following indicator and is blue, indicating an up-trending bias. In addition, the HA position is in the USDOLLAR's bullish zone, between the upper blue and upper red bands. The chart on the right is the hourly timeframe for USDOLLAR. The trend-following EMAs have crossed bullishly, and the stochastic has turned up (black ellipses). If it moves into the 80+ areas (blue arrow) and holds, an underlying bullish momentum will be developing. The longer the stochastic can maintain its upper quintile, the greater the likelihood of further greenback appreciation. This sign of strength will confirm if the hourly EMAs develop angle and separation.
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.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.