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

[RodriJames12]

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

[ParkChoi]

RORO is the market sentiment of traders while tasking risks, and it changes based on the market. During risk-on, traders favour higher-yielding currencies, and during risk-off, they favour safe currencies.

[bigxy]

In my opinion USD is always a safe heaven currency when it comes to forex trading so we have to keep check on USD index while trading any forex trading pair.

[boltushkin]

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.

[AndyNichols]

I had the same questions in my mind as well.