Monday London Session Market Musings

danewilliams (35)in #forex • 6 years ago

Let's kick things off with some Monday London session market musings.

We're a weekend and a full trading session since Powell's Jackson Hole speech, but the US Federal Reserve is still driving moves across forex markets. With today's economic calendar light as a feather, this is still our overriding theme to start to the week off.

Main points:

Powell expressed confidence in the US economy.
Doesn't see inflation getting out of hand.
Expects to see further interest rate increases as expected (data dependent).

Some key quotes:

"If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate."

"While inflation has recently moved up near 2 per cent, we have seen no clear sign of an acceleration above 2 per cent, and there does not seem to be an elevated risk of overheating."

The narrative of recent USD weakness seems to be attributed to a so called dovish Powell. Now I wouldn't say anything herehas been overly dovish myself. I mean it's not the good old days of a data dependent Fed, right?

What I would say however, is that with the US Dollar having gone gangbusters post breakout, this is a very nice technical pullback. A pullback that just happens to coincide with the breakout point on the DXY:

Coincidence? There is no such thing as a coincidence in markets...

For me, USD bias is all about whether price is above or below this zone and any day trades in the majors aren't going to come until we're above or below it.

Best of probabilities to you.