Forex Forecast: Pairs In Focus - Sunday, February 23

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 February 23

In my previous piece last week, I forecast that the best trades were likely to be short of the EUR/USD currency pair and long of the S&P 500 Index. Over the week, EUR/USD rose by 0.17% while the S&P 500 Index fell by 0.93%, so overall these were losing trades with an averaged loss of 0.55%.

Last week’s Forex market saw the strongest rise in the relative value of the Euro, and the strongest fall in the relative value of the Japanese Yen.

Fundamental Analysis & Market Sentiment

Fundamental analysts are now tending to see less chance of a U.S. rate cut after recent releases of stronger than expected economic data which surprised the market, sending the U.S. Dollar higher almost everywhere. Last week’s FOMC Meeting Minutes also showed the committee continue to see U.S. economic growth as firm and likely to continue.

Sentiment on both the Euro and on the British Pound has soured as it is appearing less likely that the E.U. and the U.K. will be able to agree a positive trade deal by the end of 2020. France’s President Macron has just expressed this view.

The Chinese coronavirus outbreak may have stabilized, with the latest data suggesting that the outbreak has peaked. However, new cases are beginning to be discovered more widely by geography. The Japanese Yen was hit by a sharp fall which may be at least partly driven by concerns that the virus will impact Japan either directly or due to the contagion of economic damage in the Asian region generally. This concern also seems to be hurting the Australian Dollar which is very exposed to the major Asian economies.

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