From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
All eyes have been on the US dollar and interest rates in recent weeks.
Last week, we saw a timely kick save from the bond market as the 30-year reclaimed its summer lows. Whether the latest rebound in rates will hold is yet to be seen as the 10 and 30 are currently chopping sideways just above our risk levels. We’re watching the long end of the curve closely to see how yields react at these critical levels.
But what about the US dollar?
When we analyze the US Dollar Index $DXY, it’s hard to be bearish, as price is consolidating in a tight continuation pattern following a base breakout and swift leg higher last month. As usual, the direction in which the DXY resolves will have broad market implications and will affect risk assets around the globe.
We know you’re probably tired of hearing it, but this is another big week for markets — especially the dollar!
As investors brace themselves for the Federal Open Market Committee announcement tomorrow, the stage is set for some volatility from the buck.
So let’s dig in and look at a couple of charts that will help prepare us for the next major move in forex markets.