A quiet start to the week, as here in the UK we enjoy the last public holiday before Christmas and with Labor Day next Monday it’s time once again to focus on the US dollar following last week’s FOMC minutes and the conclusion of the Jackson Hole Symposium. The former of these events was the catalyst which helped to propel the USD index significantly higher as Janet Yellen’s comments were perceived as being hawkish. This move took the USD through and beyond the resistance at 81.80 to close Friday’s trading session as a wide spread candle at 82.38 on the weekly chart.
This price action was in sharp contrast to the previous three weeks which had seen the index stall in the 81.70 region where 2 shooting star candles had suggested weakness. These have been duly overwhelmed by last week’s price action, adding strength to the platform of support in the 81.50 region. The index is now moving into a deep region of price congestion which extends from the current price level at 82.50 all the way through to 84.50 and beyond, and for any continuation of the current bullish move higher, the index needs to break through these key levels. However, it is interesting to note that in this morning’s trading (albeit with thin volumes) the index opened gapped up and it will be no surprise to see this gap filled in due course.
By Anna Coulling