Forex Forecast: Pairs In Focus - Sunday, March 29

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. Of course, the current market environment is one of crisis and very high volatility, and price movements are entirely dominated by the economic impact of the coronavirus pandemic. That is the dominant factor to consider in trading any market today.

Big Picture March 29

In my previous piece last week, I forecast that the best trades were likely to be short S&P 500 Index, WTI Crude Oil, and the EUR/USD currency pair. Over the week, the S&P 500 Index rose in value by 11.05%, WTI Crude Oil fell by 6.84%, and the EUR/USD currency pair rose by 4.06%, so the average loss here was 2.76%.

Last week’s Forex market saw the strongest rise in the relative value of the U.S. Dollar, and the strongest fall in the relative value of the Australian Dollar.

Fundamental Analysis & Market Sentiment

The world is not coming to an end, but we are living in an extraordinary time of global health crisis, the type of which has not been seen in one hundred years. There is a great deal of fear and panic, but it is important to remember that the evidence shows that the vast majority of people are going to be OK.

In time such as these, it is extremely difficult to make very short-term market forecasts, as the crisis can change focus day by day, strongly affecting sentiment and market movements. However, medium-term forecasts are easier to make as high levels of volatility tend to accompany see-sawing price movement.

We have seen the epicenter of the global pandemic move into Europe and the United States, with new confirmed infections and deaths rising exponentially in Catalonia, New York, Paris and London.

All stock markets are now in technical bear markets (decline of more than 20% from peak). However, many markets, especially the U.S., have seen firm recoveries this week. The U.S. stock market has been boosted by a $2.2 trillion emergency stimulus package, but this has weakened the Dollar as it is effectively printing a lot of new currency and devaluing the currency. Nevertheless, this is likely to be a fake rally, as the data suggests the daily death toll will continue to rise exponentially in the U.S. while much of the population, punditry and politicians remain in a state of denial concerning the severity of the crisis.

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