USDOLLAR Remains Strong Despite Uncertain Week


Weekly Chart

The weekly chart below makes for an interesting analysis. This week's candle (aqua arrow), which is still to be completed, is a doji. This is a candle of uncertainty. Bulls tried to take the price up and the bears tried to take the price down, however, despite intentions, the price remains relatively flat for the week. Given the uncertainty surrounding omicron, the doji candle is not surprising. However, in terms of weekly trend, the greenback remains in a strong position. The short green moving average is above the mid orange moving average, and the mid orange moving average is above the long red moving average. This is a bullish formation. Moreover, this is supported by the stochastic, which remains above 80.

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

Daily Chart

The ramifications of the weekly doji are seen on the daily chart. Here, momentum is waning. The short green moving average is converging on the mid orange moving average (aqua ellipse). A bearish cross will take the moving averages out of bullish formation, into a neutral formation. I.e. the mid orange moving average will still be above the red long moving average. Moreover, the stochastic has dropped below 80 (red rectangle), as daily momentum declines.

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

Hourly Chart

The weekly doji's influence is also apparent on the USDOLLAR hourly chart. There was a spike up as Fed Chair Powell testified in front of the Seante Banking Committee on Tuesday (aqua arrow). This was in response to his hawkish comments and tone. However, since then the greenback has settled back and is trading in a narrow range, oscillating around 12,200. As a result, the moving averages have continuously whipsawed on the short-term term time frame. This is because moving averages are classified as trend-following indicators. I.e. they are prone to false signals when the price moves sideways. There appears to have been a build-up of potential momentum since 2:00 pm GMT yesterday. However, this looks to be dissipating and the hourly stochastic has dropped out of 80 (red rectangle).

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

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The longer-term USDOLLAR trend remains up and intact. However, this week has seen uncertain price action. This has resulted in momentum waning and a general sideways movement for the greenback. The Fed has pivoted to the hawkish side, which is USDOLLAR supportive. However, the omicron variant has introduced uncertainty. The market is awaiting further developments on this front, and will price in the news as it becomes available.

Featured Image by Arek Socha from Pixabay

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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