The difference between success and failure in Forex trading is very likely to depend upon which currency pairs you choose to trade each week, and not on the exact trading methods you might use to determine trade entries and exits. Each week I am going to analyze fundamentals, sentiment and technical positions in order to determine which currency pairs are most likely to produce the easiest and most profitable trading opportunities over the next week. In some cases it will be trading the trend. In other cases it will be trading support and resistance levels during more ranging markets.
Big Picture
In my previous piece last week, I forecast that the best trade would be long USD/CAD. USD/CAD ended the week down by 0.96% so this was a losing trade.
Last week saw a rise in the relative value of the Canadian Dollar and the Euro, while everything else fell, particularly the New Zealand Dollar.
The major event of last week was weaker then expected GDP growth in the U.S. Dollar, as well as continuing developments in global tariff disputes.
Fundamental Analysis & Market Sentiment
Fundamental analysis tends to support the U.S. Dollar, as American economic fundamentals continue to look relatively strong. The Canadian Dollar strengthened on slightly positive Canadian GDP data, while the weakest currency is clearly the New Zealand Dollar. Sentiment became increasingly negative on the Kiwi as the Reserve Bank of New Zealand said it expected to maintain an expansionary policy “for some considerable time.
The week ahead will probably be dominated by the release of U.S. FOMC Meeting Minutes and Non-Farm Payrolls data due towards the end of the week.
Technical Analysis
U.S. Dollar Index
The weekly price chart below shows that for the second week running, a weak bearish pin candlestick move was made over the week, with the Index rejecting the resistance level at 12085 as shown in the price chart below. However, it is remaining above its price level from both three months ago and six months ago, sitting in a long-term bullish trend. There is also evidence that there may be new, higher support at 12011. This produces a partially unclear situation which suggests that the price may be bearish over the short-term, while still in a bullish trend that can be expected to reassert itself.
