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 February 2020

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

For the month of January, we forecast that the best trades would be long EUR/USD and long NZD/USD. The final performances were as follows:

Weekly Forecast February 2

We made no weekly forecast last week, and we do the same this week, as there were no strong counter-trend movements last week.

The Forex market has shown increased activity, with 30% of the important currency pairs and crosses moving by more than 1% in value over the past week. Volatility is likely to be higher still the coming week. A sharp rise in volatility will become more likely the longer this period of relatively low volatility continues.

Last week was dominated by relative strength in the Japanese Yen, and relative weakness in the Australian Dollar.

You can trade our forecasts in a real or demo Forex brokerage account.

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 should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts: