This site has been designed to provide regular news, forecasts, analysis and updates on the forex markets, to help retail forex traders around the world improve their trading decisions, and to help them gain a deeper understanding of the forex markets.
Global forex markets are dominated by the three major currencies, namely the US dollar, the euro and the Japanese yen, and it is these three that ultimately dictate the strength or weakness of one against another, either in directly related currency pairs, or in the cross currency markets. The US dollar of course holds the premier position of the currency of first reserve, and the ultimate safe haven for paper based assets as a result. However in the last few years we have seen this position slowly eroded, with the rise of the euro, but this too has stumbled in the last few months as increasing concerns over sovereign debt, and the possible default of on of the major European partners helping to dampen enthusiasm for the euro, as investors return once more to the safe haven of the US dollar.
The Japanese yen is also considered a safe haven currency, which makes trading the USD/JPY particularly tricky, since both currencies compete for this role, and in addition the yen is also heavily influenced by the needs of major exporters in Japan who drive the markets with the regular and substantial currency exchange requirements. This is very unlike any other currencies which tend to be dominated by speculative trading rather than true currency exchanges between multinational companies.
Should the US dollar ultimately loose it’s status as the world currency of first reserve, then the implications for forex traders and the global exchange markets would be severe and long lasting, with a resulting collapse in market confidence, banking infrastructures and global world economies. At present this seems unlikely, but in the last few months has been a topic that is never far from the news with the FED driving the currency lower as it implements further quantitative easing in an effort to hold inflation at bay in the longer term.
This then is the global market against which we trade each and every day, and against which as technical traders, the price chart reflects market sentiment on a second by second basis!
