Forex Forecast: Pairs in Focus

  


The U.S. stock market fell last week, with most of the downwards movement coming after the Federal Reserve injected a more cautious note into its economic forecasts, and as data showed new coronavirus cases are showing a positive rate of increase in the U.S.A. overall.

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. The current market environment has changed from one of crisis to rebound, despite the growth in the global coronavirus pandemic which continues.

Big Picture 14th June 2020

In my previous piece last week, I suggested two trades for this week: Long of the S&P 500 Index following a bearish pullback on the daily chart which then reversed with a bullish day, and long of the AUD/USD currency pair following a daily (New York) close above 0.7000.

We did not get this set up on the S&P 500, but we did see a daily close in the AUD/USD currency pair above 0.7000 on Monday. Unfortunately, over the rest of the week, the price fell by 2.19%.

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

Fundamental Analysis & Market Sentiment

The world is not coming to an end, but we are living in an extraordinary time of global health crisis, the type of which has not been seen in one hundred years. There is both fear and optimism, but it is important to remember that the evidence shows that the vast majority of people are going to survive and be healthy.

Recent days have seen daily new confirmed coronavirus cases hit new all-time highs. This is a sign that globally, the wave of disease is not dying down yet.

We see the epicenter of the global coronavirus pandemic move into Latin America, with Brazil now seeing more new deaths from the virus than any other country in the world, and a higher total death toll than any country except the U.S.A. The rolling averages of deaths have decreased significantly in the U.S.A. as a whole and in the U.K., which has recorded more deaths than any other country in Europe. European nations are beginning to relax restrictions, as is the U.S.A. in a patchy way. However, the U.S.A. has seen an increase in new cases over recent days.

Latin America and the Caribbean are now responsible for approximately 45% of confirmed new daily deaths, with the U.S.A. at about 17% and Europe a little less than 16%. Brazil has the highest daily death toll of any country in the world. The strongest exponential growth in new confirmed cases is happening in Brazil, India, Saudi Arabia, South Africa, Egypt, Argentina, Iraq, Indonesia, Sweden, and Israel.

The U.S. stock market fell last week, with most of the downwards movement coming after the Federal Reserve injected a more cautious note into its economic forecasts, and as data showed new coronavirus cases are showing a positive rate of increase in the U.S.A. overall.

Those countries which have fared best in suppressing coronavirus are smaller nations such as Denmark, Norway, Greece, Austria, Denmark, and the Czech Republic.

Technical Analysis

U.S. Dollar Index

The weekly price chart below shows last week printed a bullish pin candlestick which rejected the area around 12200 (I identified this level as likely to provide support) which has provided some support over recent months. There is no long-term trend, as the price is lower than it was 3 months ago but higher than it was 6 months ago. Overall, next week’s price movement in the U.S. Dollar looks marginally likely to be upwards based upon the recent price action.

US Dollar Index Weekly Chart

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S&P 500 Index

The major U.S. stock market index, the S&P 500 Index – the biggest market index in the world – fell last week but still closed just above its 200-day moving average and the psychologically important round number at 3000. These are important pivotal levels that can be used to determine the health of the market.

The likely price movement Index is difficult to predict over the coming week. A period of consolidation may be likely.

S&P 500 Index Weekly Chart

EUR/USD

Last week printed a bearish pin candlestick which rejected the area near the top of its recent multi-month range and the resistance level at 1.1330. We may now see the price continue to fall if the long-term ranging pattern continues.

EUR/USD Weekly Chart

Bottom Line

I do not see any attractive weekly trade set-ups for this week.



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