Forex in April: second assault on USD. Forecast for USDCAD, USDNOK, GBPUSD and NZDUSD as of 31.03.2022


Do not be surprised by the weakening of the US dollar in response to the Fed’s monetary restriction. Other central banks are beginning to follow the Fed’s path, which leads to strengthening their currencies. Let’s discuss the Forex outlook and make up a trading plan for USDCADUSDNOKGBPUSD, and NZDUSD.

Monthly G10 currencies fundamental forecast

After four very successful months in a row, statistical analysis with fundamental components finally failed in March. However, this does not mean that you should stop using it. Any strategy sooner or later brings losses, and those who have not learned how to lose money on Forex will never earn them. Losses are a necessary attribute of traders’ activity. They, unlike sappers, can afford to make mistakes more than once. Let’s remember about money management and continue to study seasonal patterns in the dynamics of the main world currencies.

Usually, the Canadian dollar and the Norwegian krone are leaders in April. These currencies of the oil-producing countries from 1975 to 2021 strengthened against the greenback in 33 and 31 cases out of 47, respectively. The British pound, the Swedish krona, and the New Zealand dollar also performed well. The rest of the G10 currencies can be attributed to outsiders.

Rise-fall periods

Source: BoE, LiteFinance calculations.

In terms of medians, the Kiwi and sterling outperformed their peers, including the oil-sensitive currencies. But the positions of the euro and the Swiss franc left much to be desired.

Averages and medians

  

Source: BoE, LiteFinance calculations.

In favorable periods in the middle of spring, the Canadian dollar grew by an average of 1.7%, the Norwegian krone and the British pound by 2.2%, the New Zealand dollar by 2.4%. When closing in the red, the average loss of the euro and the Swiss franc was 1.7% and 2.1%, respectively.

Price dynamics during rise-fall periods

Source: BoE, LiteFinance calculations.

In my opinion, seasonal patterns that took place from 1975 to 2021 may be confirmed in 2022. Firstly, oil has the opportunity to continue its rally amid supply disruptions associated with the displacement of Russian oil from the market. This serves as a growth driver for USDCAD and USDNOK bears. Secondly, issuing central banks of the NZD, the GBP and the CAD are moving towards monetary tightening.

Regulators usually move in a pack, led by the Fed. The leader has already confirmed its intention to raise the federal funds rate at seven FOMC meetings in 2022. Most of the Committee members, amid strong jobs report and inflation data, are not against borrowing costs quickly reaching a neutral level. It can be assumed that the factor of aggressive monetary restriction has already been priced in the USD, so the initiative should go to the closest competitors.

I would like to believe that the armed conflict in Ukraine has reached its climax and the situation will begin to improve shortly. This will be a strong argument for selling the greenback as a safe-haven currency.

Monthly USDCADUSDNOKGBPUSD, and NZDUSD forecast

Thus, the continuation of the oil rally will help the USDCAD and USDNOK bears. While the second cycle of monetary tightening following the Fed will allow entering GBPUSD and NZDUSD purchases. It makes sense to use the short-term growth of the US dollar in response to positive US data for entering USD sales.

 

Price chart of USDCAD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. 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.

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