Talking Points:
• Following a seven consecutive month rally, the USDollar has turned to tight congestion
• Waiting for a top catalyst like the FOMC decision is too far out to suspect as this pattern's spark
• A break may not come from a top theme, but there are options for a downtime move for either direction
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The 10-day rate of change on the USDollar is lowest we've seen in four months. After a seven month climb, the benchmark currency has spent the past four-weeks consolidating in a tight range. This same congestion is obvious across majors like EURUSD, AUDUSD and USDJPY. While the medium-term view is still favorable for the Greenback, the short-term has wrung much of the premium out of the currency's primary catalyst - favorable monetary policy bearings. See a significant change in this theme would likely take a more significant update than major events we've seen recently - NFPs, 4Q GDP, Yellen testimony. The next FOMC rate decision may turn the tide, but that is three weeks out. Short of a shift towards 'risk' theme or an unexpected, high profile event that stirs rate speculation; a technical break may have to develop against a consolidation-type (technical and fundamental) backdrop. In today's Strategy Video, we look at what such a break for the Dollar would look like and which pairs are better positioned for a bullish or bearish outcome.
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