Forex Forecast: Pairs at a Glance
Get the Forex forecast using Fundamentals, Sentiments and Technical Position Analysis for Major Pairs for the week of April 26, 2021 here.
The difference between success and failure in Forex trading will most likely depend primarily on 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 entries and exits. trading.
When starting the trading week, it makes sense to look at an overview of what is developing in the market as a whole and how those developments are affected by macroeconomic fundamentals and market sentiment.
This is a good time to trade the markets right now, as there are some valid long-term uptrends in major US and European stock indices, which can be traded at most Forex brokers as CFDs, as well. than on a medium-term dynamic. in favor of the euro and the Japanese yen and against the US dollar.
Overview 25e April 2021
The Forex market last week saw the biggest rise in the relative values of the Euro and the biggest drop in the relative value of the US dollar.
I wrote in my previous post last week that the best trades would probably be long from the S&P 500 and Dax 30 indices. While the S&P 500 index ended the week virtually unchanged, the Dax 30 index closed lower by 1.54%, or an average loss of 0.77%.
Fundamental analysis and market sentiment
The main takeaway from last week is that market sentiment remains risk-oriented, particularly on the US and the German-centric Eurozone. Demand has been fueled by accommodative monetary policies and stimulus measures in the United States, despite fears the policy could lead to untenable inflationary pressures and higher corporate taxes. The main US stock index, the S&P 500, briefly traded at a new record high on Friday.
The US dollar has fallen again over the past week after encountering technical resistance three weeks ago, as its long-term trend is mixed. There is medium-term momentum against the dollar while a similar bullish momentum is in favor of the euro and to a lesser extent the Japanese yen. We are also seeing long-term strength in the Canadian dollar, which is supported by fundamentals and Bank of Canada policies.
The past week has been dominated by monthly policy releases from the European Central Bank, which contained no surprises and had little effect on the euro, and the Bank of Canada, whose release was larger because it brought forward the schedule for the start of the rate hikes.
The main events next week will be the federal funds rate and the US Federal Reserve’s FOMC statement, as well as advance US GDP data and the Bank of Japan‘s outlook report. Typically, FOMC publications are the primary driver of Forex market volatility, so we can expect an active Forex market during the second half of this week.
Last week, the global number of new confirmed coronavirus cases increased for the eighth week in a row to new record highs, after falling for more than two months, driven mainly by a resurgence of the virus in Asia (especially in India). The total number of deaths worldwide also increased again last week for the fifth week in a row. There is a lot of informed speculation that the death toll in India is considerably higher than the official total of around 2,600 per day, while there are currently around one million new confirmed cases every three days.
Many countries have launched vaccination programs. With the exception of extremely small countries, the fastest progress towards collective immunity has been in Israel, the United Kingdom and the United Arab Emirates, with studies claiming that Israel and the United Kingdom have de facto achieved “collective immunity”. Immunization is advancing rapidly in the United States, and the European Union has finally started to ramp up the pace of its program enough to start making a difference.
The strongest growth of new confirmed cases of coronavirus occurs in Argentina, Bahamas, Bolivia, Cambodia, Colombia, Croatia, Cuba, Cyprus, Egypt, Georgia, India, Iran, Iraq, Japan, Kazakhstan, South Korea, Malaysia, Nepal, Netherlands, Paraguay, Saudi Arabia, Sri Lanka, Trinidad, Tunisia, Turkey, Venezuela and Uzbekistan.
US dollar index
The weekly price chart below shows that the US dollar index printed a firmly bearish candlestick last week after rejecting the key resistance level a few weeks ago shown above the current price in the chart below. below and performed a bearish reversal. New lower resistance levels have been printed on the downside which is a bearish sign. The index is still barely above its price three months ago, which is a bullish sign, but it is still further below the mentioned key resistance level and is below its price. ‘six months ago, suggesting that bearish momentum has developed. Overall, next week’s US dollar price movement appears to be slightly downward. For this reason, it will probably be wise not to take long USD trades in the coming week.
S&P 500 Index
The incredible rise in the US stock market since the initial impact of the coronavirus in March 2020 continues, with the price holding up last week to trade briefly on Friday at another all-time high. It was definitely a break from the recent steep rise so the bulls will probably do well to be a little cautious here and wait for a daily close above 4200 before looking to get long again. Above this level, the price will be in the blue sky with bullish momentum, which would suggest that the rise would likely continue for a few days.
EUR / USD
While there is no long term trend, the weekly chart below shows that we have seen relatively strong bullish momentum over the past three weeks, with the actual bodies of these candlesticks larger than what we have seen for several months. So we can say that there is a medium term uptrend that could continue at least at the resistance level at 1.2227 which caps the recent high inflective long-term price above.
USD / JPY
While there is no long term trend, the weekly chart below shows that we have seen relatively strong bearish momentum over the past three weeks, with a clear bearish inflection point impacting the psychologically important zone of 110.00. So it can be said that there is a medium term bearish trend which could continue at least at the support level at 106.67. shown as a likely key level in the pricing table below.
At the end of the line
I see the best likely opportunities in the financial markets this week as being long of the S&P 500 after a daily close (New York) above 4200, and in short term cautious trades long EUR / USD and short of USD / JPY.