Market Overview

USD Forex Trading Tendencies: Forecast For 2016


Usually US Dollar positions tend to be unstable in the last month of the year, however, this year things are different – and it means that in the forthcoming year US Dollar is going to get higher.

 “December is one of the worst months for the dollar from a seasonality perspective so the fact that the FXCM USDOLLAR Index (basked of USD versus EUR, JPY, GBP and AUD) is pretty much unchanged this far into month is probably a good sign,” – Kristian Kerr, Senior Currency Strategist for DailyFX, said. – “Obviously, there is a lot of time left before year-end so I would not completely write off the possibility that negative seasonal forces reassert themselves before then, but time is ticking. January, on the other hand, is historically a very strong month for the Greenback so if it continues to hold up here there is probably a decent chance that we could see a strong move to start the year”.

According to Kerr’s analysis, it looks like the positions of US Dollar will get stronger – at least at the beginning of the year. Things might turn worse starting from May with the lowest point in November. However, this yet has to be proved, for there is still a possibility of a sudden twist in the first months of spring.

Tyler Yell, Trading Instructor for DailyFX, also claims that US Dollar’s strength is going to increase in 2016.

“For now, the clean support on the US Dollar remains the 100-DMA at 12,040. While tactical/ short-term traders may find opportunities selling the US Dollar above the 100-dma, the strength of the US Dollar along with stable yields and weakness elsewhere make the higher probability move higher.” – Tyler says.

Tyler also provides a piece of advice to both careful and risky traders in 2016: “Conservative or patient traders who want confirmation of a move higher before jumping in the trade may want to wait for a break above the post-Fed higher near 12,204/6. 12,204/6 combines the closing high of the extreme day high for US Dollar in 2015 on November 6th and Wednesday’s Bull Run high. Traders that are more attracted to a good risk: reward may prefer to enter now with targets beyond the current 2016 high at 12,219, and a stop below the pre-Fed low of 12,040.”

Talking of overall Forex trading trends in 2016, there are several main points that should be taken into consideration. Firstly, with a recession promised by world’s economic leaders, short-time trading is in queue. Traders also mustn’t underestimate the impact of politics on the market - the swift changes in this field will trigger the changes and risks in forex, thus making it a hard job for investors to find reliable currencies. And, of course, due to the consequences of the forex-fixings scandal in 2014, the new system of regulation of forex prices is currently being developed, which means an opportunity for forex traders to play fairer. All in all, 2016 is definitely going to be quite a controversial year for forex trading.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Forex Markets


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