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A Brief Look on the Forex Market in the First Week of 2020
Having said goodbye to 2019, the forex market soon entered the first trading day in 2020. Due to the long holiday, the market has not been very liquid at the start of a new year. USD may be largely affected by political factors, while the move of other currencies this week has been signaling further trend. Lets take a look on the forex market in the first week of 2020.To get more news about WikiFX, you can visit WikiFX news official website.
EUR/USD
With little doubt, USD remains the most followed currency on the market. 2020 is the election year in the US and whether President Trump will remain in office will largely affect the market. From rewriting the North America free-trade agreement to starting a trade war and posting high tariffs on other countries, Trumps economic policies during his presidency have significantly reshaped the global economy, and to certain extent are responsible for its slowdown. Trump has been the third US president in history that faces an impeachment, and market views the impeachment result to be a determining factor for his re-election. As for the election, historical data suggests the dollar usually fares well in the election year, falling only twice in all election years during the past 40 years, while what seemed to be a sell-off in 2012 turned out different than it appeared to be. Though history does not always repeat itself, past experience suggests 2020 may be a good year for the dollar.
In analysis at the end of 2019, we mentioned that the sluggish US economic indicators could mean the dollar may experience a down period before the economy rallies in 2020, and this has been proved by the decline of USD/JPY in the past week. Since the beginning of trading session in the new year, USD/JPY has been jittering down-slope, and on January 2nd (EST) the pair further dropped to breach the previous low-point support, suggesting that a even worse situation is imminent. Its estimated that the exchange rate can be moving toward the low-point during October and early November last year.
AUD/USD
AUD/USD stayed bullish near the end of 2019, closing at its highest level since July on Boxing Day, and again climbed 90 basis points at the end of the year, pushing the rate of AUD against USD above 70 cents. Much in line with previous estimation, the Australian dollar is a first choice for profit-taking. For the first week in 2020, AUD has breached the previous doji low, which signals a reverse of the trend. But the market is still looking for evidence that a low-point higher than the previous one has formed, expecting for another bullish trend. This can be a very psychologically challenging process.
As the new year starts with a fresh outlook, knowing the market trend will help you gain greater advantage in forex trading. Stay tuned as WikiFX brings you more forex updates. |
