At this time the economic downturn hits every country in the world. None of the countries of which currencies are available to forex trading are not affected by the current economic crisis. So the basic question to retail forex traders like me is “which currency to focus on?” When I started this blog, I highly favored the Euro against the US Dollar, after seeing a long period of Euro strength, going from around $1.00 to an amazing $1.63. Then until 2 months ago, the Euro started to lose value against USD, as its economy was found to be less resilient than that of the United States.

For the time being, it’s very hard to predict which of the two currencies would get stronger against the other in the short term, as both economies are hard hit. So it seems, the best strategy at this time would be the Yen and carry trade. Financial news affect Yen crosses (like USD/JPY, EUR/JPY) strongly and make these Yen crosses fluctuate almost the same way as stock market. This phenomenon presents a great trading opportunity. As you can see, stock markets are greatly influenced by traders’ mood and more easily predicted. If you match a Yen cross with the Dow Jones index, for example, trades are getting easier to plan.

Let’s take an example, everyone could easily predict that the last US Beige Book released would deliver pessimistic outlook on US economy, which would sink the stock indexes at least for a short time. So if you placed a short order on a Yen cross (let’s say, EUR/JPY) right before the news release, you would reap at least 100 pips in profit within a few hours.

In forex trading, any opportunities that help traders predict future moves are considered precious gems that should be cherished and fully utilized. At this time with the global economic downturn, the Yen seems to be the best pick for such profit opportunities.