Forex Analysis - Financial News & FX Daily Forecast

In our last commentary on the euro in late August, we wrote that the common currency was set to weaken further thanks to (1) slowing growth, (2) slowing inflation and (3) an outsized speculator long position in euro futures and options. Following the publication of our last commentary, EUR/USD has weakened from 1.1730 – 1.180 (the top-end of its trading range that we update daily on our...

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In our previous commentary on the US dollar, we wrote that the buck was set to rise further thanks to our forecast for slowing US growth and inflation. Given the US dollar’s safe haven qualities, the currency performs the best when economic conditions deteriorate. Following the publication of our last commentary, the performance of the US dollar index (a measure of the currency against major pee…

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In our last take on the euro in April, we wrote that the bullish case for the currency was running out of drivers. Specifically, we wrote that decelerating Eurozone growth (in rate-of-change terms), changes in trading patterns and overly bullish speculator sentiment was likely to weigh on the euro in the future. At the time, EUR/USD was trading around 1.23, near its 2018 high just above 1.2550. 

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In our previous piece on pound sterling, we wrote that the currency was likely to weaken thanks to (1) slowing growth across Europe, (2) excessively bullish speculator sentiment and (3) Brexit-related woes. Thanks to the UK’s significant trading ties with the EU, we wrote that the pound was unlikely to escape a slowdown across the region. Furthermore, speculator positioning in the pound looked ex…

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The Canadian dollar is the best performing major ‘risk on’ currency this year. Against the US dollar, the loonie is down by 4.5% this year. This beats all other major ‘risk on’ currencies including the euro (-5.3%), British pound (-5.9%) and the Australian dollar (-6.9%). In our last commentary, we argued that the outlook for the Canadian dollar was neutral thanks to rising crude oil prices and …

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In our last commentary on the Australian dollar, we wrote that the currency was an enticing short opportunity thanks to slowing Chinese growth and a bearish trend. Specifically, we recommended shorting AUD/USD as means to express a bearish view on the currency. Since that time, the pair has weakened (from 0.7560), and is trading around 0.7280 on August 13.  Going forward, we see further...

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In our last commentary on the US dollar, we wrote that the buck was set to move higher given underlying economic trends. Specifically, US growth and inflation was likely to keep accelerating, while the opposite was likely to happen in most major regions outside the United States. Following the publication of our last commentary, the US dollar index has strengthened from around 91.80 to around...

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Tags: US dollar

In our last commentary on the Japanese yen, we wrote that the currency was looking excessively weak against the euro. In particular, we stated that bullish catalysts driving EUR/JPY were at risk as speculator positioning in both long euro and short yen trades were looking extreme. In addition, we flagged changes to the Bank of Japan’s “yield curve control” program as a potential risk for yen stre…

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In our previous analysis on the pound, we claimed that the number of catalysts driving the currency’s bullish trend were running out. At the time, we warned that the rally was running out of momentum, but did not see any evidence that would suggest adopting a bearish stance. Following recent weakness in the British pound, we downgraded our longer-term outlook on the currency to bearish on April 2…

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In our previous commentary on the US dollar, we warned that a weak dollar was hiding significant risks in growth-sensitive assets such as equities and European currencies. As the world’s reserve currency, the buck is inversely correlated to most financial assets because most cross-border lending is conducted in dollars. Thanks to a slowdown in economic growth outside the United States coupled wit…

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At MarketsNow, we specialize in clear, data-driven analysis of the foreign exchange market so you have the information you need to make smart investment decisions. Human beings are prone to psychological biases, so decisions made by intuition alone can result in costly errors - which is why using accurate data in your investment process is critical. By basing our forex market analysis process on numbers, we ensure that the information we provide is accurate and based on fact, not pre-conceived notions. Here's an overview of the factors we consider when creating a forex analysis.

Policy

A government's fiscal policies and monetary policies understandably have an impact on currency trading, so it's an important factor to consider as part of any investment analysis. We look at fiscal policy, and the impact of tax rates, government spending and international relations to predict which plans will boost near-term growth - and which policies could have an adverse impact on the strength of a currency.

Monetary policy is also vital to consider in the overall picture of fx market analysis, as central banks can influence the cost of borrowing money by raising or lowering interest rates. This will impact the value and appreciation of a currency against the currency of other countries.

Sentiment

To best analyze sentiment, one of our key sources is the Commitments of Traders (COT) report. The report provides a weekly breakdown of how futures traders are positioned in various markets (including currencies). The report is especially powerful as it categorizes traders into many different categories (e.g. speculators, asset managers, dealers, commercials, etc.). We focus on how speculators are positioned in each currency, narrowing in on any extreme, 'at risk' positions that could indicate a potential direction change in the near future.

Our sentiment analysis is combined with technical data - drawing from the Relative Strength Index and historical tops and bottoms to further bolster our recommendations.

Economic Data

While most media outlets focus on mid-term gains and losses by breaking down economic data into quarters, that information can be a hindrence when it comes to making long-term recommendations. We look at year-over-year movements to shed light on underlying trends that will impact the forex market to gain an accurate, comprehensive view of economic changes that could impact our forex trading analysis.

By analyzing the market through three distinct perspectives, we're able to provide expert forex analysis daily to currency traders and speculators around the globe.