Happy Friday, traders! Are you ready to trade at the end of the week? Here’s what you need to know before you start:
May 2020 forex season trading
April seasonal patterns weren’t supposed to work, but somehow they did. Even a strong fundamental issue such as the global recession amid the coronavirus couldn’t overwhelm it. That’s why May seasonal patterns may work as well.
However, it’s better to combine seasonal trading with technical and fundamental analysis. All together they will help you to make a successful trade.
Risk-off currency pairs
There is a good proverb: “Sell in May and go away”. It seems that it’s true for all currencies this month except safe-haven ones such as USD, CHF and JPY that will remain strong. According to Bloomberg, the US dollar index increased in 8 of the past 9 months of May. On average it rose by 1.53% in May over the past decade. Also, CHF should perform greatly in May as it's the strongest month over the past decade for the franc against the US dollar. However, take into account that CHF has been fallen for last 3 years.
Risk-on currency pairs
AUD has recently showed the steady rise, but according to seasonal patterns it’s time to stop it as May is going to be a weak month for the aussie. The average May decline over the past ten years was 2.33%.
May will be the worst time for EUR/USD, EUR/GBP and EUR/CHF. EUR/USD was decreasing in 8 of the past 9 years. The average May decline was 1.76% over the past decade.
This month will be disappointing for GBP/USD as the US dollar will be more favorable for investors amid the economic uncertainty. However, EUR should perform worse than GBP, that’s why EUR/GBP can drop.
The first week of November promises to be eventful, as we have the Fed meeting, the BOE update, and the NFP release. Read more details here.
Last week several important economic updates influenced the Forex market. US preliminary GDP fell less than expected (0.6% actual vs. 0.7% forecast). Below you will find the key events to trade on during the week from August 29 to September 2.
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