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 March 4

In my previous piece last week, I saw the best possible trades for the coming week as long of the S&P 500 Index, and short of the USD/JPY currency pair. The S&P 500 Index fell by 2.02%, but the USD/JPY also fell by 1.38%, producing an average loss of only 0.32%.

The most important development in the market last week was a stall in the continuing recovery in the U.S. stock market from its recent corrective low, with the price falling by more than 2% over the week but ending with a bullish pin candlestick which suggests higher prices next week. The market has also seen the U.S. Dollar appear to resume its long-term bearish trend in the greenback. The new concern is over a possible trade war between the U.S.A. and the European Union, as President Trump announces plans to impose steep tariffs on imports of foreign steel and aluminum. The long-term yield on the U.S. Dollar also continues to threaten to rise above 3%.

As for other currencies, the Japanese Yen remains in the spotlight, as it again this week made a new 15-month high price against the U.S. Dollar, and a new 3-month high price against the Euro. The Japanese Central Bank is not sending out any signals in favor of this strengthening, and there is speculation that some of the Yen’s rise may be caused by Japanese investors repatriating overseas investment, yet that is questionable. It is true however that the market consensus sees the Bank of Japan as likely to begin tightening monetary policy later this year, even though dovish senior staff are being left in place, and the Finance Minister recently remarked upon the importance of exchange rate stability and the possibility of market intervention.