Get Forex forecasts using fundamental, sentiment and technical position analysis for major pairs for the week of December 6, 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 entries. trading exits.

At the start of the trading week, it is a good idea to get an overview of what is developing in the market as a whole and how these developments are affected by macro fundamentals and market sentiment. Marlet.

There are a few long term trends that are starting to reassert themselves, so this can be a profitable time to trade the markets.

Large image 5^e december 2021

Last week’s Forex market moved in line with the longer-term bullish USD, but price movements were driven more by other currencies and the stock market tumble for the second week in a row. The new omicron variant of the coronavirus, feared to be potent enough to evade vaccines and potentially require economically painful measures, has driven down risky assets and money flowing into shelters. It is not yet clear whether the effect of omicron will be bad or not, but until it is known, the markets will likely be dominated by fear.

In the Forex market, we see the Australian and New Zealand dollars the most weakness as commodity currencies are highly vulnerable to a resurgence of the coronavirus, with the Australian dollar being particularly weak after falling more than 6% in the in the last five weeks only. Safe havens such as the Japanese yen, Swiss franc, and US dollar are all higher. The markets are clearly in risk mode.

I wrote in my previous room last week that the best trades of the week were likely to be long in USD / ZAR and USD / MXN. Unfortunately, the USD / ZAR currency pair fell 0.68% and the USD / MXN fell 2.06%. This produced an average loss of 1.37%.

Fundamental analysis and market sentiment

The headlines to take away from last week were:

1. A worrying variant of the coronavirus, called the omicron variant, has spread to more than 40 countries. The variant is highly mutated, and it is believed that it may have a strong ability to evade current vaccines. Some countries have already closed their borders to non-nationals and imposed isolation on all new arrivals. It is still not clear to what extent this variant is more transmissible, more resistant to vaccines, or more deadly. There is evidence of the first two but little of the latter, in fact there is speculation that omicron causes milder disease. However, South Africa, where the omicron is becoming dominant, has seen a spectacularly exponential increase in cases and an increase in the number of young people hospitalized in recent days.

2. Non-farm payroll data in the United States was much weaker than expected, with only 210,000 net new jobs created compared to the 553,000 new jobs expected.

3. OPEC decided to increase crude oil production in early 2022 per 400,000 additional barrels per day, despite already falling prices. This pushed the price of crude oil further down, although WTI crude oil found support near key inflection point at $ 61.89.

4. Federal Reserve Chairman Jerome Powell has strongly suggested that reduction should be accelerated and also removed the language that inflation was “transient,” likely strengthening the US dollar with this more hawkish monetary policy tilt.

5. Australia’s GDP was better than expected, but still posted a quarterly contraction of 1.9%, compared to an expected decline of 2.7%. This is recessive if it is maintained. The poor Australian outlook is reflected in the falling Australian dollar.

The coming week should see a similar amount of volatility, with a direction likely to be determined primarily by how dangerous the omicron variant is as more tests are done on it. The volatility will be due more to omicron than to anything predicted for the release, as it will be a relatively light week for the data. The main economic publications scheduled for the coming week will be:

1. Reserve Bank of Australia policy publication monthly.

2. Bank of Canada monthly police notice.

3. US CPI (inflation). This is probably the most important factor, as annualized inflation in the United States is already at its highest level in over 30 years and probably has not peaked yet.

Last week, the global number of new confirmed coronavirus cases increased for the seventh week in a row after falling for two months previously.. The situation was already not good in Europe before the discovery of the omicron variant. About 54.9% of the world’s population has now received at least one vaccine. Pharmaceutical industry analysts now expect a large majority of the world’s population to receive a vaccine by mid-2022.

The omicron variant has been confirmed to be present in forty countries.

The strongest global growths of new confirmed cases of coronavirus are currently occurring in Andorra, Belgium, Cyprus, Denmark, Finland, France, Germany, Italy, Jordan, Lebanon, Luxembourg, Mali, in Malta, Monaco, the Netherlands, Norway, Poland, Portugal, San Marino, South Africa, Slovakia, Switzerland, Spain, Slovenia, Trinidad and United States.

Technical analysis

US dollar index

The weekly price table below shows the US dollar index printed a bullish candlestick last week, again hitting its highest weekly closing price in over a year. The price broke above the 12238 level that I had identified as a key resistance, although the closing price was not high enough to be very confident that this resistance was invalidated. The price is above its levels of 3 and 6 months ago, showing that a long term uptrend in the greenback is present. In general these are bullish signs and are supported by the risk free market environment which is at least somewhat supporting the greenback.

The The best strategy in the Forex market over the coming week will probably be to look for long positions in the USD, CHF or JPY.

AUD / USD

The Australian dolar has fallen sharply, amid a feeling of risk that hits hard as concerns grow over the economic impact of the novel variant of the omicron coronavirus. Australia’s economy is already contracting sharply, as last week’s GDP data revealed that showed a quarterly contraction of 1.9%. The USD is relatively strong, so this pair is a major target in the Forex market and has seen a lot of action. The price of this currency pair ended last week very close to its low after falling more than 1.66%, closing at an 18-month low with strong bearish momentum. These are all bearish signs and there is a good chance that the price will experience another steep fall last week, so there will likely be an opportunity for a short trade here.

NZD / USD

The New Zealand dollar has fallen sharply, amid a feeling of risk aversion that hits hard as concerns grow over the economic impact of the novel variant of the omicron coronavirus. The USD is relatively strong, so this pair is a major target in the Forex market and has seen a lot of action, although the Australian dollar has fallen harder and is getting more attention than the New Zealand dollar, with which it is strongly correlated. The price of this currency pair ended last week very close to its low after falling more than 0.98%, closing at a one-year low with strong bearish momentum. These are all bearish signs and there is a good chance that the price will see another steep fall next week, so there will likely be an opportunity for a short trade here, although the AUD / USD may be a better one. bet So make sure you are diversified between the two antipodes currencies if you are trading the NZD.

Final result

I see the best opportunities in the financial markets this week as likely to run out of AUD / USD and NZD / USD, after each day (New York close) to new lows.