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Today, I will begin with my monthly and weekly forecasts of the currency pairs worth watching. The first part of my forecast is based upon 20 years' worth of research of Forex prices, which shows that the following methodologies have all produced profitable results:

• Trading the two currencies that are trending the most strongly over the past six months.
• Trading against very strong weekly counter-trend movements by currency pairs made during the previous week.
• Carry trade: Buying currencies with high interest rates and selling currencies with low interest rates.

Let's take a 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 for July 2023

For the month of July, I forecast that the USD/JPY currency pair will rise in value.

For the month of June, I forecasted that the GBP/USD currency pair would rise in value. The final performance of this forecast was as follows:

Weekly Forecast for Sunday, July 2, 2023

Last week, I made no weekly forecast, as there were no unusually large counter-trend price movements seen in the market, which serve as the basis of my weekly trading strategy. There were once again no such price movements seen throughout the past trading period, so I again make no weekly forecast for the coming week.

Directional volatility in the Forex market decreased last week, with not one of the most important currency pairs and crosses fluctuating over the week by more than 1%. Volatility will probably be higher over the coming week, as the weekly schedule has a couple of items of high importance listed, and we are also seeing the start of a new calendar month.

Last week was dominated by relative strength in the euro, and relative weakness was seen in the Canadian dollar and the Japanese yen.

Key Support/Resistance Levels for Popular Pairs

I often 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 monitored on the more popular currency pairs this week.

Let's see how trading one of these key pairs last week off of key support and resistance levels could have worked out.

EUR/JPY

I had expected the level at JPY155.91 might act as support in the EUR/JPY currency cross last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well.

The H1 price chart below shows how the price rejected this level not long after the start of last Monday’s London session (which can be a great time to enter Forex trades in European currency pairs) with double inside bars, marked by the upward arrow, signaling the timing of this bullish rejection. This trade was profitable, giving a maximum reward-to-risk ratio of more than 5 to 1 based upon the size of the entry candlestick structure.

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