A nervous start to the week is a distinct possibility following the aftermath of a short-lived rebellion by the Wagner mercenary Group on Saturday. However, the dollar has shown minimal response to the aborted Wagner mutiny in Russia over the weekend. The restrained reaction likely indicates the uncertainty surrounding the future course of action following the recent challenge to President Putin's authority.
Weekly USDOLLAR Analysis
FXCM's USDOLLAR basket appreciated 0.74% last week, bouncing off the lower boundary of a symmetrical triangle pattern (green converging trendlines). USDOLLAR has effectively been consolidating in this sideways pattern since the beginning of the year. Similarly, the weekly RSI has oscillated around the 50 line during this period (blue rectangle), showing no real preference to the bullish or bearish side of the indicator.
Until there is a definitive breakout, either to the upside or downside, the USDOLLAR weekly chart is in consolidation, with no defined trend.
Daily USDOLLAR Analysis
Last Thursday, the USDOLLAR moved from its bearish channel, between the lower blue and red bands, into the neutral channel, between the blue bands. This is a movement of relative strength.
In response the daily RSI has pushed above 50 (green rectangle), which is the bullish side of the oscillator. The longer it maintains this position, the greater the likelihood of further price appreciation.
Instead of focusing on the insurrection in Russia, the greenback has responded to Chair Powell's hawkish testimonies on Capitol Hill last week, as well as the prospects that renewed central bank hawkishness may usher in a recession. In other words, inflation is still a key driver. To this end, we note that core PCE will be released on Friday at 12:30 pm GMT.
Moreover, inflation will be a primary topic at the ECB annual symposium in Sintra this week. A number of central bank governors from the G7 countries are present at the event, and it can be presumed that they will convey a firm stance, akin to the message conveyed by Federal Reserve Chair Jerome Powell during his recent testimony before Congress.
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.