The currency markets are characterized by fast movement. Their volatility is often pronounced and higher than the volatility of stocks or bonds (although there are links between movements in the bond markets and those in the FX ones). This makes them good candidates for fast-paced trading. They can also be good instruments to trade if you have a long-term trading strategy.
In this article, we will focus on some key pairs. In terms of forex trading South Africa is one of the leading countries, but this information can be beneficial to traders from all over the world as well.
Good Forex pairs to keep an eye on for the remainder of 2022
- The Swiss franc against the Japanese yen, CHFJPY. This pair has been rising for a few months or almost a year, and its uptrend has recently shown some signs of weakness. The Swiss National Bank (SNB) has recently hiked interest rates by more than expected, which gave a boost to the Swiss currency, which is already buoyed by the gloomy risk sentiment. An improvement in this sentiment can weaken the Swiss France and thus support a reversal of the uptrend. If not, then the Japanese yen can also act as a good safe haven asset to hold. It is recommended to check the risk sentiment before entering this trade.
- The euro against the dollar, EURUSD. The USD has been strong recently, and the EURUSD pair has been moving in a downward direction. The hawkish Fed is the main reason for this movement. However, soon all the rate hikes will be priced in, and there will be a limit on the decline of this pair. Technicals show a breakout potential to the upside. News from the ECB, or the Fed, will be particularly potent in moving this pair. Make sure that the fundamentals and technical signals are aligned before entering a position on this highly liquid pair.
- The Sterling pound against the Australian dollar, GBPAUD. The pair has recently broken a major support level to the downside, in addition to breaking a rising trend line also to the downside. The British economy is affected by slow growth and high inflation rates. This might keep a pressure on the British currency. On the other hand, the Australian Central Bank is likely to be aggressive in the second half of this year, and the Australian economy is likely to benefit from rising prices.
- The Sterling pound against the Japanese Yen, GBPJPY. The pair has been moving sideways for a few weeks, but it seems that it has a bearish bias. Technically it seems to be forming a top. Besides the weakness of the British economy, the Japanese yen can benefit from the deteriorating risk appetite among investors.
There are several opportunities in the currency markets. However, you need to be sure that those opportunities are in line with your strategy and risk management parameters before making any entries. Moreover, you need to be sure that the risk sentiment in the overall market matches your positions. This way, your trades will likely be much less risky.