Can macro economics cause a shift of sentiment in markets reversing pairs direction completely? If so what should I be paying attention to?
Yes but you need 10,000 hours of reading and understanding this topic to correlate macro movements into pair reversals. This forum is a great start. Lots of good info here. Also checkout the book Splitting Pennies - Understanding Forex.
What one should be paying attention is always changing.
For example, right now, there’s a lot of uncertainity in the markets. In FX, every country is “printing” money to help support their economies that have suddenly stopped due to imposed lockdowns.
It will be interesting to see how this new flood of money everywhere plays out.
Funny you said that I checked forex factory to check out all the news that came out today because I’m trying to learn how to trade naked price action because supposedly the info in the candle sticks is king, so recently I’ve been staying away from news and If I would’ve tied in sentiment with my technical analysis I could’ve probably bagged over 50 pips if I paid attention to the news, smfh
At the moment, the markets are driven by fear due to the coronavirus pandemic.
In general, the more fear, the stronger the U.S dollar gets (see Dollar Smile Theory).
That’s why you’ll notice, any time there’s good news regarding coronavirus like the outbreak “peaking”, fear subsides and traders are more comfortable taking on risk, and USD falls.
In the near-term, I suggest paying attention to U.S equities, if it continues to rise, USD should fall against other currencies.
Fascinating information I would’ve never thought so if I see the dollar index rising usd should decrease? Let me do some analysis for real quick lol.
Holy crap usd JPY is like a mirror reflection of the dollar index… gasp
Yes it is possible, but such events are relatively rare. USD may be in such situation currently. It is near multi-year highs and Covid-19 fiscal and monetary responses in the US are expected to weaken Dollar considerably because of rising inflation threat => outflows from fixed income.