3 Currency Pairs to Watch as We Enter 2020

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Currencies to invest in today: top picks for 2020

How do you choose the best currency pair to trade and what are the factors which can affect the forex market?

The foreign exchange market is one of the most active markets in the world. Its average daily volume was more than £4tn in 2020 – far more than the average daily volume on the stock market, for example. Just think about it – you are able to trade 24 hours a day, five days per week, and you are not limited to trade during active trading sessions hours. No wonder many traders decide to enter the forex market and trade the currency pairs. If you are one of them – this article will help you see the difference between the currency pairs and understand the factors which can affect the forex market before you choose the currency pair to trade.

Factors affecting the forex market

First, when trading currency pairs, you should watch not only the factors affecting one currency but also the things which can influence the value of the second currency in the pair. For instance, if we take the EUR/USD pair, it is not enough just to analyse the economic indicators of the EU and leave aside the economic activities and political situation in the USA.

Although technical analysis can be very handy for defining your trading positions, fundamental factors which could affect the value of currency pairs in 2020 are also highly important. For example, it would help if you considered the influence arising from Brexit of EU, the upcoming presidential election in the US, the outbreak of Coronavirus in China, monetary policies and release of economic data.

Here are some of the factors which can have a substantial effect on the forex market:

Interest rates – a higher interest rate can have a positive effect on a currency because it may attract more capital as investors can earn higher profits. A decrease in interest rate will lower the value of the domestic currency.

Inflation – if we consider a currency pair where one country has lower inflation and the other country has higher inflation, the currency of the country with lower inflation will appreciate against the currency with higher inflation. You would want to hold the currency of an economy with low inflation.

Political situation – an example of the political events which can shape the movement of currency is the upcoming elections in the US or Brexit, which can increase uncertainty. For instance, the announcement about Brexit resulted in depreciation of the GBP against the US dollar. Accordingly, investors would prefer to buy a currency from a politically stable economy.

International Trade – strong levels of international trade can have a positive effect on domestic currency. The reason is that the demand for domestic products increases the demand for the domestic currency as buyers will seek to purchase the currency of the supplier. Consequently, the currency of a country with exports outweighing the imports would be a more favourable investment.

Economic news and releases – the economic performance of a country can be additionally evaluated by considering economic releases and the various economic indicators. Economic conditions can be analysed using the GDP levels, employment levels, manufacturing indices, etc.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Forex market overview

The majority of Central banks from developed economies have cut down interest rates which affected the value of their national currencies. However, even with such a measure, the possibility for positive effects on the overall economy is still debatable and so the forex market is marked with lower volatility.

The future move of Central Banks regarding the interest rate is difficult to predict and analyst opinion is that there is almost an equal chance that interest rates could be further cut or increase. Uncertainty regarding interest rates will continue to influence the uncertainty in the forex market in 2020.

Moreover, the trade war between US and China had a major impact on the currency market in 2020 as international trade is a factor which has crucial importance in the movement of the value of currencies. It is expected that the signing of the “phase 1” of US-China trade deal will have a positive effect on the major currencies in 2020 since it is expected to impact the international trade levels positively.

The US dollar is one of the most popular currencies in the world, and currently, it’s being under the pressure of the trade war. Let’s see how some of the other most popular currencies performed against the US dollar in 2020.

Top winners against the dollars

Weakened against the US dollar

Forex market outlook

The forex market in 2020 may be under the influence of numerous factors such as improvements in the international trade, the fact that UK left the EU on January 31, the overall performance of the global economy, the US/Iranian tensions, US presidential elections and the outbreak of the Coronavirus. The uncertainty coming from these factors may affect investors’ preference toward more stable currencies such as the Japanese Yen or the Swiss franc.

Many analysts expect that in the upcoming year the US Dollar (USD) will be subject to depreciation. This is due to the expectations that the FED will limit the interest rate rises and the lower demand for US dollar because of the decrease of investments in the global financial market. However, investors should watch the US dollar carefully, because it also has the potential to rise during election years.

The British Pound (GBP) had a bumpy ride in 2020, in anticipation of the possibility for a no-deal Brexit. But GBP finished the year slightly stronger against the US dollar and the euro.

After Brexit, it is expected that GBP will be under the influence of wider economic factors, rather than just driven by political movements. Hence, attention should be given to the UK trade deals post-Brexit, with special attention to the aspects related to the financial sector. It is yet to be seen what kind of deal will be reached between the UK and Brussels as it should be finished by the end of 2020. However, defining a favourable deal in combination with economic growth could positively impact GBP.

Slow economic growth, combined with the ECB decision to cut the interest rates down to negative 0.5 per cent, had a negative effect on the Euro (EUR) value. In addition, this was further affected by the announcement of ECB to resort toward quantitative easing. Another factor which went against the EUR was the weaker global trade coming from the trade war as well as the Brexit.

It is no surprise that investors move their funds toward the Japanese Yen (JPY) in times of higher uncertainty in the global economy. Japan has a substantial current account surplus which makes the JPY a safe currency, as it is protected against negative trends in the world economy. Moreover, US/Iranian tensions had a positive impact on the JPY value and the CHF value. Many analysts point out that investors should keep an eye on this currency because a strengthening JPY could be an indicator of potential problems.

In 2020 the Canadian Dollar (CAD) positioned itself as being one of the strongest currencies. This was primarily due to the decision of the Bank of Canada not to make changes to the interest rates. But experts believe that CAD could be overvalued, which means that it may face difficulties to experience a rise in the future. The search for a new governor could also increase the uncertainty and put pressure on potential CAD rise.

Best currency to invest in 2020

Which are the best currencies to invest in for 2020? Investors can decide to invest in some of the most popular currency pair such as the EUR/USD, GBP/USD, EUR/GBP, AUD/USD or USD/CAD. But take into consideration the uncertainty which comes from the above-mentioned factors.

If we turn to technical analysis, investors should wait to see the direction at which the price will breakout and form a firm trend before entering a trade position, as most of the currency pairs were trading in a range-bound market with limited volatility near the end of 2020.

Aside from investing in the most popular currencies, investors should not neglect the emerging economies as potential currencies to invest in 2020. Some experts believe that the improvements in economic conditions of the emerging economies such as Brazil, Mexico, Vietnam or Korea could provide a satisfactory return if you decide to hold them in the log-run.

Admiral Markets Group consists of the following firms:

Admiral Markets Cyprus Ltd

Admiral Markets Pty Ltd

Admiral Markets UK Ltd

Reading time: 9 minutes

Name a market that never closes during the working week, has the largest volume of the world’s business, with people from all countries of the world participating every day. Yes, you guessed right – the Foreign Exchange Market (Forex). The market has arisen from the need for a system to facilitate the exchange of different currencies from around the world in order to trade. It is the premier financial market in the world, which reflects the financial dynamics of world trade quite clearly.

All trade here is a trade-off between the pairs of currencies from two different countries. The famous phrase ‘money never sleeps’ – coined by the well-known Hollywood movie ‘Wall Street’ – sums up the foreign currency exchange market perfectly. No matter what time of day it is, the Forex market will stay open from 5pm EST on Sundays until 4pm EST on Fridays, every week, 24 hours a day during trading days!

When you begin to trade Forex online, you may find yourself overwhelmed and confused by the sheer number of currency pairs available through the MetaTrader 4 trading terminal. What are the best currency pairs to trade? The answer isn’t straightforward, as it varies with each trader. You need to take the time to analyse different pairs against your own strategy, to determine which are the best Forex pairs to trade on your own account.

This article will briefly describe what currency pairs are, and will assist you with identifying the best Forex pairs to trade. It will also explain what Forex majors are and whether they will work for you.

What are Currency Pairs?

Forex trading – or foreign exchange trading – is all about buying and selling currencies in pairs. For the buying and selling of currencies, you need to have information about how much the currencies in the pair are worth in relation to each other. This relationship is what defines a currency pair. A currency pair quotes two currency abbreviations, followed by the value of the base currency, which is based on the currency counter.

There is always an international code that specifies the setup of currency pairs. For example, a quote of EURUSD 1.23 means that one Euro is worth $1.23. Here, the base currency is the Euro (EUR), and the counter currency is the US dollar. Thus, each currency pair is listed in most currency markets worldwide. If you would like to learn more about Forex quotes, why not check out our article which explores the topic in greater detail?

Are Majors Really the Best Currency Pairs to Trade?

Not surprisingly, the most dominant and strongest currency, as well as the most widely traded, is the US dollar. The reason for this is simply the sheer size of the US economy, which is the world’s largest. The US dollar is the preferred reference in most currency exchange transactions worldwide. It is the dominant reserve currency of the world.

The following currency pairs (listed below) are not necessarily the best Forex pairs to trade, but they are the ones that have high liquidity, and which occupy the most foreign exchange transactions:

  • EUR/USD (Euro – US Dollar)
  • USD/JPY (US dollar – Japanese Yen)
  • GBP/USD (British Pound – US Dollar)
  • AUD/USD (Australian Dollar – US Dollar)
  • USD/CHF (US Dollar – Swiss Franc)
  • USD/CAD (US Dollar – Canadian Dollar)

The values of these major currencies keep fluctuating according to each other, as trade volumes between the two countries change every minute. These pairs are naturally associated with countries that have greater financial power, and the countries with a high volume of trade conducted worldwide. Generally, such pairs are the most volatile ones, meaning that the price fluctuations that occur during the day can be the largest.

Does this mean that they are the best? Not necessarily, as traders can either lose, or make money on the fluctuations. The aforementioned pairs tend to have the best trading conditions, as their spreads tend to be lower, yet this doesn’t mean that the majors are the best Forex trading pairs.

Learn more about the best currency pairs to trade in this free webinar recording, hosted by expert trader Jens Klatt.

What is the Best Currency Pair to Trade?

With over 200 countries in the world, you can find a handful of currency pairs to engage with trading. However, these currency pairs may not have the potential to deliver the best results to traders. So what is the best currency pair to trade? What do most traders trade? What currency pair is worth trading and why? Keep on reading this article to find out the answers to these questions and more!

Before analysing the best currency trading pairs, it is better to enhance our knowledge on the most popular currencies that can be found in the world of Forex trading. They include:

  • US Dollar (USD)
  • Euro (EUR)
  • Australian Dollar (AUD)
  • Swiss Franc (CHF)
  • Canadian Dollar (CAD)
  • Japanese Yen (JPY)
  • British Pound (GBP)

Out of these currencies you can find a few popular currency pairs. If you want to achieve success in Forex trading, you need to have a better understanding of the currency pairs that you trade. If you select any of the currency pairs we’re going to discuss below, you will make trading much simpler for yourself, as lots of expert analytical advice and data is available on them.

Analysis of the Best Currency Pairs to Trade

Let’s take a detailed look at the currency pairs below:

  • USD/EUR – This can be considered the most popular currency pair. In addition, it has the lowest spread among modern world Forex brokers. This currency pair is associated with basic technical analysis. The best thing about this currency pair is that it is not too volatile. If you are not in a position to take any risks, you can think of selecting this as your best Forex pair to trade, without it causing you too much doubt in your mind. You can also find a lot of information on this currency pair, which can help prevent you from making rookie mistakes.
  • USD/GBP – Profitable pips and possible large jumps have contributed a lot towards the popularity of this currency pair. However, you need to keep in mind that higher profits come along with a greater risk. This is a currency pair that can be grouped into the volatile currency category. However, many traders prefer to select this as their best currency pair to trade, since they are able to find plenty of market analysis information online.
  • USD/JPY – This is another popular currency pair that can be seen regularly in the world of Forex trading. It is associated with low spreads, and you can usually follow a smooth trend in comparison with other currency pairs. It also has the potential to deliver exciting, profitable opportunities for traders.

All the major currency pairs that can be found in the modern world are equipped with tight spreads. However, this fact is not applicable to the USD/GBP currency pair, because of its volatility. It is perhaps better to avoid the currency pairs that have high spreads. The recommended spread by the trading experts tends to be around 0-3 pips. When it exceeds 6 pips, the trading pair may become too expensive, which can lead towards greater losses.

Still, it doesn’t mean that you should totally avoid everything that has high spreads. The best way to trade sensibly and effectively in this regard would be to exercise risk management within your trading, so you can effectively manage the risks.

Special Pairs (Or Exotic Currency Pairs)

Typically the best pair for you is the one that you are most knowledgeable about. It can be extremely useful for you to trade the currency from your own country, if it is not included in the majors, of course. This is only true if your local currency has some nice volatility too. In general, knowing your country’s political and economical issues results in additional knowledge which you can base your trades on.

You can find such information through economic announcements in our Forex calendar, which also lists predictions and forecasts concerning these announcements. It is also recommended to consider trading the pairs that contain your local currency (also known as ‘exotic pairs’). In most cases, your local currency pair will be quoted against USD, so you would need to stay informed about this currency as well.

Conclusion

The dynamics of foreign exchange trading is an interesting subject to study, since it can provide a boost to the world economy, along with the rise and fall of its financial fortunes. As globalisation becomes a bigger, more pressing issue for most countries around the world, the fate of these pairs is closely interconnected. Make sure you study the foreign exchange market extensively before making an investment.

There are many Forex pairs available for trading and it is highly recommended to try trading most of them before you choose a particular one to stick with. As Forex trading is risky, try it first on a Demo account with a virtual balance, which contains virtual funds of $10,000. Identifying the best currency pair to trade is not easy. The best way to accomplish this is through hands-on experience. Simply open a Demo account, and start trading on the live markets when you are ready, and you will be well on your way to success in the Forex markets!

Trade Forex & CFDs With Admiral Markets

Professional trading has never been more accessible than right now! Admiral Markets offers professional traders the ability to trade on the Forex market directly and via CFDs with 80+ currencies, including Forex majors, Forex minors, exotic pairs and more! Open your live trading account today by clicking the banner below!

About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world’s most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

FXDailyReport.Com

USDX (USD Index)

The weakness of the U.S dollar index brought the index down below daily SMA 200 and the 97.50 level. We have strong bearish momentum on Friday trading session which means the bearish pressure expected to continue this week.

Traders might want to avoid long positions in the U.S dollar for now and wait for the reaction near the yellow channel.

News to watch

For full outlook for this week, you can follow Forex Outlook For The Week 3 – 7 February 2020

EUR/USD

EUR/USD launched upward with major bullish momentum. The pair closed above the trendline and set to challenge 1.1120 resistance this week. There is the daily SMA 200 present overlapping the 1.1120 expect the pair will stall near it. Traders will continue to monitor the pair reaction near the resistances level for now.

today critical levels to watch:

Support: 1.1000, 1.0900

Resistance: 1.1120, 1.1185

GBP/USD

UK Brexit is official now and Pound sterling has upper-hand against the U.S dollar last week. The pair continues moving upwards above the bullish engulfing pattern and expected to test 1.3250 this week. As long as there is no breakout of 1.3000 – 1.3250, GBP/USD will continue its movement inside the range.

Today Critical level to watch:

Support: 1.3125, 1.3050, 1.3000

USD/JPY

USD/JPY reached the daily SMA 200 support level on Friday trading session. The pair closed as a strong bearish candlestick and might continue its bearish pressure this week. No suggestion yet as the pair located at a strong support level. If a major bullish pattern formed then traders could enter long positions.

Today critical levels to watch:

Support: 108.50, 108.00

Resistance: 109.00, 109.70, 110.00

AUD/USD

The only direction for the pair is down for now. No bullish candlestick formed on the chart, bearish momentum candlestick formed instead. At the current time, traders will continue to hold short positions until major bullish patterns formed.

Today critical levels to watch:

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners and Middle-Leveled Traders!
    Free Demo Account!
    Free Trading Education!
    Big Sign-Up Bonus!

  • Binomo
    Binomo

    Trustful Broker. Recommended Only For Experienced Traders!

Like this post? Please share to your friends:
Binary Options: How To Start Trading
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: