FXCM's USDOLLAR index dropped yesterday from its bullish channel, between the upper blue and red bands, into its neutral area, between the blue bands. This was a movement of relative weakness. Technically, a decline in the USDOLLAR on the daily chart effectively normalised an overbought RSI (green rectangle).
However, other factors were also at work. The announcement that the Federal Reserve was planning to "skip" a rate increase during the June meeting, coupled with positive developments regarding the debt ceiling agreement, contributed to the greenback's decline.
However, today's NFP release also needs to be considered. It will play a significant role in influencing the Fed's decision regarding a potential interest rate hike in June. If the NFP meets expectations and shows a moderate increase of around 193K jobs, an unemployment rate of 3.5%, and a month-on-month growth of 0.3% in hourly earnings, it is unlikely to change the prevailing belief that the Fed will pause in June, most likely resulting in a relatively stable albeit slightly weaker dollar.
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.