This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 16 years of Forex prices, which show that the following methodologies have all produced profitable results:
- Trading the two currencies that are trending the most strongly over the past 3 months.
- Assuming that trends are usually ready to reverse after 12 months.
- Trading against very strong counter-trend movements by currency pairs made during the previous week.
- Buying currencies with high-interest rates and selling currencies with low-interest rates.
Let us look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:
Monthly Forecast August 2020
For the month of August, we forecast that the EUR/USD currency pair was likely to see a rise in price. The performance so far is as follows:
Last week, we made no weekly forecast.
This week, we again make no forecast, as there were again no strong counter-trend price movements.
The Forex market showed a decrease in volatility compared to the previous week, with 19% of the important currency pairs and crosses moving by more than 1% in value last week. Volatility is likely to remain low over the coming week, however, due to a near-total absence of high impact scheduled economic data releases.
Last week was dominated by relative strength in the Canadian Dollar and relative weakness in the Euro.
Key Support/Resistance Levels for Popular Pairs
We teach that trades should be entered and exited at or very close to key support and resistance levels. There are certain key support and resistance levels that can be watched on the more popular currency pairs this week.
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