Forex Forecast: Pairs In Focus - Sunday, Dec. 9

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 December 9

In my previous piece last week, I again forecast that the best trade would be short of the EUR/USD currency pair. The price rose by a relatively small amount, giving a loss of 0.66%.

Last week saw a rise in the relative value of the Japanese Yen and the Euro, and a strong all in the relative value of the Australian Dollar.

Last week’s Forex market was relatively quiet, with the U.S. Dollar changing little in value and the market dominated by other, more minor currencies.

This week is likely to be dominated by Britain’s crucial Brexit Parliamentary vote plus GDP data, U.S. inflation data, and the monthly input from both the European Central Bank and the Swiss National Bank.

Fundamental Analysis & Market Sentiment

Fundamental analysis still tends to support the U.S. Dollar, as American economic fundamentals continue to look strong, although there is an increasing consensus that the picture is weakening which is supported by the lower than expected number of jobs added last week. It now seems that the path of hikes in the near term will be slowed considerably, which shows increasing relative fragility in the U.S. economy. Sentiment seems to be still in favor of the U.S. Dollar, but it is weakening. Fundamentals remain bearish on the Japanese Yen, but this currency can still benefit occasionally from safe-haven “risk off” money flow.

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