Forex Forecast: Pairs In Focus – Sunday, Sept. 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 September 23

In my previous piece last week, I forecast that the best trades would be short AUD/USD and short NZD/USD. Unfortunately, these trades finished negatively: the AUD/USD currency pair rose by 1.87% over the past week, and the NZD/USD currency pair rose by 2.05%, producing an average loss of 1.96%.

Last week saw a rise in the relative values of the Australian and New Zealand Dollars, and a fall in the relative value of the Japanese Yen.

Last week’s Forex market was dominated by the increasing likelihood of a “no deal” exit from the E.U. by the U.K., and strong Canadian retail sales data, producing a more volatile market with stronger directional movements than have been seen over recent weeks.

Fundamental Analysis & Market Sentiment

Fundamental analysis tends to support the U.S. Dollar, as American economic fundamentals continue to look relatively strong. Sentiment has turned against the Dollar a little though, as inflation and PPI data both came in below consensus expectations. It is likely that markets will take a more negative sentiment on the British Pound.

The week ahead is likely to be dominated by key U.S. Dollar items, particularly the FOMC Statement and Federal Funds Rate, as well as final GDP data due later. The monthly input from the Reserve Bank of New Zealand is also due.

Technical Analysis

U.S. Dollar Index