Last week, I saw the best possible trades for the coming week as long GBP/USD, short AUD/USD, and long of Crude Oil in U.S. Dollar terms. The individual results were mixed, but the overall result was extremely positive, as the GBP/USD currency pair rose by 0.94%, the AUD/USD currency pair rose by 0.62%, and Crude Oil rose by 4.13%, producing a large average gain of 1.48%.

The Forex market over the past week has continued its bearish turn on the U.S. Dollar. This was boosted by the FOMC Meeting Minutes containing more dovish language than had been expected regarding the pace of future rate hikes. The Euro was boosted by a perceived improvement in the German political and economic outlook, with a growing sense that Chancellor Merkel will eventually be able to form a new government despite the collapse in coalition negotiations. The price of Crude Oil continues to advance as nothing is happening to reduce increasing regional tension between Saudi Arabia and Iran.

The news agenda this week is almost certainly going to be dominated by some items of important U.S. economic data, mostly the new Preliminary GDP data, as well as Janet Yellen’s testimony before Congress on the U.S. economic outlook. There is also an OPEC meeting which could strongly affect the price of Crude Oil, which has had an active market lately.

The American stock market is in a strong long-term bullish trend, and it made a new all-time high price on Friday.

Following the current picture, I see the highest probability trades this week as long of the S&P 500 Index, long of Crude Oil in U.S. Dollar terms, and long of GBP/USD. These pairs are all trending, and have short-term momentum in the direction of the prevailing trends.

Fundamental Analysis & Market Sentiment

The market is largely bullish and “risk-on”, with stocks and oil looking particularly strong, while the U.S. Dollar looks weak.

Technical Analysis

U.S. Dollar Index

This index printed a large, bearish candlestick, which closed very close to its low, and there is no obvious support level below. It would not be a surprise if the price fell further, but the long-term trend has been weakening, so a period of consolidation is very possible.