Weekly Forex Forecast (16/10/23) EurUsd / XauUsd + Forex Trading Plan! [HD]

Weekly Forex Forecast: Dollar Rally and Swiss Franc as the Best Market to Trade

Hey traders, welcome back to the weekly Forex forecast! Last week, we saw the dollar correcting and still in consolidation. However, on Thursday and Friday, the dollar rallied sharply due to hotter than expected inflation data and inflation expectations out of the US. This week, I still like dollar long plays to the upside, but it’s the Swiss franc that’s really standing out as the best market to be trading in Forex.

Top Currency Picks for the Week

If we take a quick look at the scores for the coming week, we can see that the Swiss franc is sitting at the top of the scorecards. Not only is it the strongest in absolute terms, but it’s also above the crucial 50% mark, indicating outperformance in the market. Swiss franc long plays are my number one pick heading into this week. My favorite Forex pair would be Aussie Franc to the downside, as it exhibits similar characteristics to the Aussie dollar. Additionally, I like New Zealand dollar versus the Swiss franc, as well as the bearish to neutral stance of the Euro and the pound against the Swiss franc.

Excluding Japanese Yen due to Volatility Risks

We won’t be looking at the Japanese yen this week due to the risks associated with volatility shocks. Although the yen is one of the better shorts in the scorecards, the potential for a volatility shock over the next two weeks makes it a risky trade. To trade defensively, I am focusing on risk-off markets to avoid being on the wrong side of a potential volatility shock.

Favorite Markets for the Week

After the Swiss franc pairs, my favorite markets are Aussie dollar to the downside, New Zealand dollar to the downside, Euro dollar to the downside, and pound dollar to the downside. These markets align with the risk-off sentiment and offer potential trading opportunities.

Market Analysis: Crude Oil

Crude oil experienced a gap up due to events in the Middle East, but it sold off nicely from there. However, the dilemma with crude oil is the potential for an escalation in the Middle East, which could cause a spike in prices. Therefore, I am sitting out on crude oil trades this week to avoid the risks associated with geopolitical tensions.

Forex Pairs Analysis

Starting with Aussie Franc, it is my favorite market for the week. The sell-off last week exceeded expectations, and any pullback in this market is viewed as an opportunity to look for bearish reversals and breakouts. Similar analysis applies to New Zealand Franc, Euro Franc, and Pound Franc, with pullbacks in these markets presenting potential short opportunities.

Moving on to dollar pairs, my favorite picks are Aussie dollar, New Zealand dollar, Euro dollar, and pound dollar to the downside. Any pullback in these markets is viewed as an opportunity to look for bearish breakouts.

Gold and Silver Analysis

Gold experienced a sharp move on Friday due to flight safety concerns related to the Middle East conflict. While the dollar’s strength is a negative factor for gold, its safe haven qualities make it a potential long play. Any pullback in gold is viewed as an opportunity to look for bullish breakouts, with targets set at 1,1980 or a retest of the 1,880 area.

Silver, on the other hand, lacks outright safe haven qualities and is more volatile. Therefore, I prefer to leave silver out and focus on gold for potential trades.

Frequently Asked Questions

1. Why is the Swiss franc the best market to trade this week?

The Swiss franc is the strongest currency in absolute terms and above the crucial 50% mark, indicating outperformance. It is a safe haven currency and performs well in risk-off environments.

2. Why are the Japanese yen shorts excluded this week?

Due to the potential for a volatility shock over the next two weeks, I am trading defensively and focusing on risk-off markets. The Japanese yen, although a good short, carries risks associated with volatility shocks.

3. What are the favorite markets for the week?

The favorite markets for the week include Aussie dollar, New Zealand dollar, Euro dollar, and pound dollar to the downside. These markets align with the risk-off sentiment and offer potential trading opportunities.

4. Why are crude oil trades being avoided this week?

The potential for an escalation in the Middle East poses risks for crude oil prices. While there is a potential for a downside move, any spike in prices due to geopolitical tensions could result in losses. Therefore, it is safer to sit out on crude oil trades.

5. Should I consider long plays in gold and silver?

While the dollar’s strength is a negative factor for gold, its safe haven qualities make it a potential long play. However, silver lacks outright safe haven qualities and is more volatile. It is recommended to focus on gold for potential trades.