Forex Forecast: Pairs In Focus - Sunday, Jan. 13

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 January 13

In my previous piece last week, I was long Silver/USD only. This pair fell by 0.61%, producing a loss.

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

Last week’s Forex market was relatively quiet and was dominated by a strong recovery in Crude Oil and other commodity currencies, and a lesser recovery in the stock market. The British Pound also strengthened as the British Parliament took steps to prevent a “no deal” Brexit outcome. As I thought, as the Brexit vote approaches this Tuesday, the British Pound has begun to experience more volatility.

This week is likely to be dominated by the Brexit vote and some other key items of British economic data, and G20 meetings towards the end of the week.

Fundamental Analysis & Market Sentiment

Fundamental analysis remains unclear on the U.S. Dollar. The stock market continued to recover from its lows but remains a bear market technically. There are still major fears over the seeming high sensitivity of the economy to any further rate hikes, as evidenced by the fact that the FOMC appears to have given up on its originally planned further rate hikes for 2019. The ongoing trade dispute with China appears to be moving towards a positive resolution, which is a good sign. However, the government shutdown appears to be an intractable dispute. JPMorgan currently suggest that the market is pricing in a 60% chance of an economic recession in the U.S. occurring at some point during 2019.

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