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How does risk-on-risk-off (RORO) influence forex trading decisions?


RodriJames12

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On 2/29/2024 at 8:49 PM, RodriJames12 said:

How does risk-on-risk-off (RORO) influence forex trading decisions?

In a risk-on environment, characterized by optimism and confidence in the economy, traders tend to favor higher-yielding currencies like the Australian dollar or the New Zealand dollar, while selling safe-haven currencies such as the US dollar and Japanese yen. Conversely, in a risk-off environment, marked by uncertainty and fear, traders typically seek refuge in safe-haven currencies, leading to increased demand for assets like the US dollar, Japanese yen, or Swiss franc, while selling off riskier currencies.

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