USDOLLAR Subdued As We Head Towards FOMC Release


The dollar's momentum has slowed as we head towards the FOMC statement release tomorrow (15 December) at 7:00 pm GMT. This is to be expected, as the tone of the statement will be a key focal point for market participants. However, December has been a less volatile month for the greenback. At the time of writing the December range of FXCM's USDOLLAR basket is only about 35% of November's range. Moreover, the current monthly candle (still to complete), reflects uncertainty:

  • It is an inside candle i.e., completely within last month's candle with no real directional bias.
  • It is a spinning top. I.e., bulls could not gain any real traction on upswings, but neither could the bears on downswings, with the candle relatively flat for the month.

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The decline in the momentum is notable below. FXCM's USDOLLAR basket has moved from an area of strength to the neutral area, between the blue bands. The FOMC statement is likely to cause market volatility on release and persist through the press conference, scheduled for 7:30 pm GMT. However, our interest lies in where the greenback will settle once the market calms. Will it be in the area of strength, weakness, or remain neutral? This will largely be a function of the dot plots and tone of communication. A large part of the Fed's hawkishness has already been priced into markets.

Past Performance: Past Performance is not an indicator of future results.

Financial instruments don't move in a straight line and the FXCM USDOLLAR basket appreciated by 2% over six week. Market particpants may use the FOMC release as an opportunity to bank some profit i.e., the proverbial "buy the rumour, sell the fact." Whilst this is conjecture, we would look to the daily chart, and where the greenback settles as participants digest the release, for near-term direction. This will then be reassessed in terms of emerging fundamental themes and primary trend considerations.

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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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