Fundamental look about the currency volatile.

Hello folks,

Forex markets is amazing but sometimes is so unpredictable to make one right decision due a lot of reasons ( politics, economy, social welfare, etc. )

Well, I need to understand better how works the economics... some trader in myfxbook is economist...?

80% of my tradings are based in fundamental news.

I am reading here about stocks:

''Gold gains as Obama assures world U.S. will work to avoid fiscal cliff
[...] Forexpros - Gold prices rose in Asian trading on Thursday after U.S. President Barack Obama assured the world his administration and Congress will take steps to steer the country away from a fiscal cliff, which sparked demand for risk.

The fiscal cliff, a combination of rising taxes and cuts to government spending converging at the close of this year, could tip the U.S. into a recession next year if Congress fails to address it.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery were up 0.31% at USD1,724.15 a troy ounce, up from a session low of USD1,720.95 and down from a high of USD1,725.95 a troy ounce.

Gold futures were likely to test support at USD1,708.35 a troy ounce, Wednesday's low, and resistance at USD1,754.65, Monday's high.

Fears U.S. lawmakers are running out of time to steer the country away from the fiscal cliff have suppressed appetite for risk and sent investors chasing the dollar, which normally trades inversely from gold. [...]
 
Page: https://www.forexpros.com/news/commodities-news/gold-gains-as-obama-assures-world-u.s.-will-work-to-avoid-fiscal-cliff-241255

So, why when the US stocks are rising in rally the USD get down trend against the EUR?
Why the fiscal cliff fears is bolstering the currency?

And in opposite: Why the lack of fear about the fiscal cliff make the Dollar low?

If We get one US Recession next year the currency will move up. How to explain this?

Opportunities for buyers in EUR?
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Thanks all.

I am no expert on this. But I think it has to do with correlated markets and risk on risk off.

For example. Avoiding the fiscal cliff (fiscall cliff is basicaly austerity measures in USA) is such a positive thing not only for USA and the dollar but also for the rest of the world. It means a less chance of recession in USA economy in short term and that is good news for the other world economies.

When this happens people buy euros and other riskier currencies. they buy spanish debt, they buy greek debt, they buy commodities, everything rallys up.

Thats what I think.

porquilho posted:
I am no expert on this. But I think it has to do with correlated markets and risk on risk off.

For example. Avoiding the fiscal cliff (fiscall cliff is basicaly austerity measures in USA) is such a positive thing not only for USA and the dollar but also for the rest of the world. It means a less chance of recession in USA economy in short term and that is good news for the other world economies.

When this happens people buy euros and other riskier currencies. they buy spanish debt, they buy greek debt, they buy commodities, everything rallys up.

Thats what I think.

i think you are much right

Thanks guys.

Hmmm... I'm not so sure about the fiscal cliff but here's my theory: the USD will dive once the fiscal cliff is implemented but there is a standoff now between the Democrats and Republicans in the house. The standoff is seen as a positive sign that the fiscal cliff will be prolonged and this is good for the dollar.