This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 16 years of Forex prices, which show that the following methodologies have all produced profitable results:

  • Trading the two currencies that are trending the most strongly over the past 3 months.
  • Assuming that trends are usually ready to reverse after 12 months.
  • Trading against very strong counter-trend movements by currency pairs made during the previous week.
  • 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 August 2018

    For the month of August, we forecast that the best trades will be short EUR/USD and short GBP/USD. For the month of July, we forecast that the best trades would be long USD/JPY and long USD/SEK. The final performance was as follows:

    Currency Pair

    Forecast Direction

    Interest Rate Differential

    Performance to Date

    USD/SEK

    Long ?

    2.50% (2.00% – -0.50%)

    -1.71%

    USD/JPY

    Long ?

    2.10% (2.00% – -0.10%)

    +1.01%

    Weekly Forecast 5th August 2018 

    Last week, we make no forecasts, as there were no strong counter-trend movements.

    This week, we again make no forecast, as there were again no strong counter-trend movements.

    This week has been dominated by relative strength in the Swiss Franc and Canadian Dollar and relative weakness in the Euro.

    Previous Monthly Forecasts

    You can view the results of our previous monthly forecasts here.

    Key Support/Resistance Levels for Popular Pairs

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