All traders have bad streaks. If they believe that there are no victories without losses, then the situation will eventually end well. Let’s discuss the market outlook and make up a trading plan for EURUSD, GBPUSD, USDJPY, AUDUSD, USDCAD, and USDNOK
Monthly G10 currencies fundamental forecast
Statistical analysis with fundamental components over the past 2-3 years has rarely broken even. I don’t remember when it happened with a loss, but it had to happen someday. May was an extremely unlucky month for seasonal patterns’ bulls. The US dollar and safe-haven assets fell short of expectations. The USD went down against the euro and the Swedish krona, while the GBPCHF and AUDJPY sales were also unsuccessful. Is it worth abandoning a strategy that has been profitable for years because of one failure? I think no. Use it with extreme caution, because no one knows whether the difficult period will drag on or not.
If until 2021 May was a very good month for the US dollar, then in June the situation usually changed dramatically. Between 1975 and 2020, the greenback was more likely to weaken than it rallied against the rest of the G10 currencies, while the Canadian and Australian dollars and European currencies were among the leaders. The positions of the Japanese yen were also unprofitable. Seasonal patterns have intensified over the past 10 years. For example, the last 9 out of 10 times since 2011 the EURUSD closed June in the green zone.
Rise-fall periods
Source: BoE, LiteForex calculations.
Analysis of the averages suggests that there are risks of a major collapse of the Scandinavian currencies as well as the British pound in early summer, although according to medians, the US dollar still looks like the biggest loser in June.
Averages and medians
Source: BoE, LiteForex calculations.
In its worst times, the yen lost 1.3% on average. During the best periods, the franc strengthened by 2.5%, the pound – by 1.9%, the euro – by 1.7%, the Australian dollar by 1.6%, and the Canadian dollar – by 1.1%.
Price dynamics during rise-fall periods
Source: BoE, LiteForex calculations.
In my opinion, if the stabilization of the US Treasury bond yields is delayed, which, in turn, will reduce the risks of falling US stock indices, then expect a continuation of the USD downtrend. This largely depends on the reaction of the Treasuries to the US May jobs report. This report can set the direction of the Forex market for a whole month, so the interest in it from the side of investors looks natural. The disappointing data will discourage the Fed from QE tapering talks and give reason to buy GBPUSD and EURUSD. On the contrary, strong data will serve as a signal for entering USDJPY long trades.
The commodity currencies look quite profitable right now. The market will soon find out if Iranian oil exports will recover in full due to the lifting of sanctions against Tehran, and when this will happen. Reducing uncertainty will serve as a signal for USDCAD and USDNOK sales and allow Brent and WTI bulls to go ahead. The reason for entering AUDUSD longs may be the improvement of Australia-China relations and (or) the recovery of the iron ore uptrend.
EURUSD, GBPUSD, USDJPY, AUDUSD, USDCAD, and USDNOK trading plan for a month
Thus, before the release of the US May jobs report, investors need to stay cool and make haste slowly.
Price chart of EURUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.
- 2020
- 2021
- 7
- 9
- advice
- among
- analysis
- article
- Assets
- BEST
- Biggest
- Blog
- British
- Bulls
- buy
- Canadian
- closed
- comments
- commodity
- content
- currencies
- data
- Dollar
- dollars
- Early
- Euro
- European
- exports
- Failure
- Fed
- forex
- full
- good
- Green
- HTTPS
- image
- interest
- investment
- Investors
- IT
- Jobs
- logo
- Long
- major
- Market
- official
- Oil
- Opinion
- Outlook
- Preview
- price
- Rates
- reaction
- Recover
- recovery
- reduce
- report
- REST
- sales
- Sanctions
- set
- Short
- So
- stay
- stock
- Strategy
- summer
- Talks
- time
- Traders
- trades
- Trading
- treasury
- us
- US Dollar
- US Treasury
- USD
- worth
- years
- Yen