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 22

Last week, I saw the best possible trades for the coming week as long GBP/USD, and long of the S&P 500 Index in U.S. Dollars. The overall result was positive, as although the GBP/USD fell by 0.70%, the S&P 500 Index rose by 0.83%, producing a small average win of 0.06%.

The Forex market over the past week has reversed and moved back in favor of the U.S. Dollar again, against the long-term bearish trend in the greenback. The news was dominated by the U.S. Senate’s approval of a budget vehicle for tax cuts planned by the Trump administration, which was very positive for the U.S. Dollar and for the U.S. stock market also.

The news agenda this week is almost certainly going to be dominated by U.S. GDP data due Friday, as well as central bank input from the European Central Bank and the Bank of Canada.

The American stock market is still making new all-time highs which is always a bullish sign.

Following the current picture, I see the highest probability trades this week as long of the U.S. Dollar against the Japanese Yen and New Zealand Dollar, and long of the S&P 500 in U.S. Dollar terms.

Fundamental Analysis & Market Sentiment

Sentiment is currently more bullish on the U.S. Dollar and stocks following a more positive outlook concerning the potential success of President Trump’s tax cut plan. As there are no major releases scheduled until Wednesday, this mood is likely to continue until that day at least. There is an election in Japan today, and it seems clear that the current administration will be returned, so this is unlikely to have a significant impact upon the Japanese Yen.