Forex Forecast: Pairs In Focus - Sunday, March 14

gold and black round coin

The difference between success and failure in Forex trading is very likely to depend mostly upon which currency pairs you choose to trade each week and in which direction, and not on the exact trading methods you might use to determine trade entries and exits.

When starting the trading week, it is a good idea to look at the big picture of what is developing in the market as a whole and how such developments and affected by macro fundamentals and market sentiment.

It is a good time to be trading markets right now, as there are some valid and strong long-term trends in favor of the U.S. dollar, Bitcoin, and the Canadian dollar against some other traditional safe havens such as the Japanese yen.

Big Picture March 14

Last week’s Forex market saw the strongest rise in the relative value of the Canadian dollar and the strongest fall in the relative value of the Japanese yen. Trends in the U.S. dollar are not strongly pronounced at present, with the real action in the Forex market now taking place in other currencies.

I wrote last week that the best trades were likely to be long of the USD/JPY currency pair and short of the EUR/USD currency pair. This was a good call, as although the EUR/USD rose by 0.36%, the USD/JPY rose by even more at 0.61%.

Fundamental Analysis & Market Sentiment

The headline takeaway from last week is that the market sentiment globally moved more strongly into risk-on mode. We saw rises in risky assets such as stock indices, Bitcoin, and riskier commodity currencies such as the Canadian dollar. Most major global stock indices rose over the week.

The U.S. dollar fell a little over the past week, after performing strongly in recent weeks, despite a renewed increase in the 10-year U.S. Treasury yield to well beyond the benchmark 1.5% rate. The pace of the rise in yields over recent weeks has been faster than at any time in the previous 25 years, leading to concern about the re-emergence of inflation as a problem in advanced economies. The major event last week affecting U.S. markets was the passage of a new $1.9 trillion coronavirus relief bill which will entail payments of $1,400 to most adult Americans and inject liquidity into the U.S. economy.

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