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’s 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 April 2020

For the month of April, we forecast that the best trade will be short AUD/USD.

For the month of March, we forecast that the best trade would be short AUD/JPY. The performance was strongly profitable, as shown below:

Weekly Forecast April 5

Last week, we forecast that the EUR/AUD currency cross would rise in value over the coming week. In fact, it fell very slightly, by only 0.17%.

This week, we make no forecast, as there were no strong counter-trend price movements over the past week.

The Forex market is showing a slightly lower level of price activity compared to the previous week, with 74% of the important currency pairs and crosses moving by more than 1% in value over the past week. This relatively high level has not been seen for more than 11 years. Volatility is likely to remain at a high level over the coming weeks as the world grapples with the coronavirus pandemic.

Last week was dominated by relative strength in the U.S. Dollar, and relative weakness in the Australian Dollar.

Previous Monthly Forecasts

You can view the results of our previous monthly forecasts here.

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.