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 April 8, 2018

In my previous piece last week, for the first time in a long while I made no trade calls, due to the severe weakening of the prevalent trends and general directionless market uncertainty. I think this was a good call as markets continued to either range or move counter-trend and the movements did not seem obvious.

Last week saw a still-volatile stock market where the S&P 500 ranged above a supportive 200-day simple moving average. The steady fall in stock valuations has been halted, but the chart still looks dangerous for bulls. The major event in the Forex market, the U.S. Non-Farm Payrolls data, came in weaker than expected, which was negative for the greenback at the end of the week. Risk sentiment is also broadly deteriorating due to the prospect of a trade war between the U.S. and China, as both announce tariffs on imports of the other’s goods.

The overall effect of these developments was to leave the U.S. Dollar broadly unchanged, while the Japanese Yen has fallen quite strongly. The market’s focus over the coming week should now move to the U.S. CPI data and FOMC Meeting Minutes, as well as the ECB Monetary Policy Meeting Accounts.

Fundamental Analysis & Market Sentiment

Fundamental analysis tends to support the U.S. Dollar; however, sentiment is contradicting this at present due to poorer than expected Non-Farm Payrolls data. Sentiment is likely to remain unchanged until Wednesday’s CPI data, unless there are any new developments concerning U.S. / Chinese trade tariffs or the Russia / NATO tension.