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 October 28
In my previous piece last week, I forecast that the best trade would short of the EUR/USD. This was a good call and a profitable trade, with the currency pair falling over the week by 0.95%.
Last week saw a rise in the relative value of the Japanese Yen, and a fall in the relative value of the British Pound.
Last week’s Forex market was dominated by a continuing selloff in stock markets which is boosting safe havens such as the Japanese Yen, while there is continuing nervousness over a no-deal Brexit which is impacting the British Pound. The Bank of Canada raised its interest rate, but this had relatively little market impact.
The U.S. Dollar remains mildly bullish as GDP came in slightly higher than expected, at 3.5% compared to the consensus forecast of 3.3%.
This week is likely to be dominated by central bank input from the Bank of Japan and from the Bank of England, as well as by U.S. Non-Farm Payrolls data.
Fundamental Analysis & Market Sentiment
Fundamental analysis tends to support the U.S. Dollar, as American economic fundamentals continue to look strong. Sentiment seems to be still in favor of the U.S. Dollar as despite strong selloffs in the stock market, the economic fundamentals are still seen as quite strong, although there is perhaps a greater feeling that the continuing rate hikes are going to weigh on growth sooner or later. Fundamentals remain bearish on the Japanese Yen, but this currency can benefit from safe-haven “risk off” money flow and has been benefiting while stock markets continue to sell off.
