Forex Trends to Watch this Year

Forex Trends to Watch this Year

Running a home in this economic environment isn’t always easy. As inflation rises, sticking within a monthly budget without cutting corners is becoming tricky. But there are ways in which you can make a little extra income on the side. You could supplement your monthly budget without upsetting your busy schedule or lifestyle.

Forex trading is one such option. Currency trading is not just the domain of professional traders. You too could speculate on currencies and turn a nifty profit from the comfort of your home. Forex is a 24-hour market. It offers the flexibility to trade on your own time without having to stick to a set schedule. All you need is a laptop or mobile device, some initial deposit money and a trading strategy. Here are some tips on forex trends to watch this year, to help you get started:

The currency markets have been rangebound for most of 2018. As we head into the Q2, there are several trends that investors should be aware of. From central bank activity to economic growth, the future macro backdrop will play a large role in driving the currency markets. The US is planning on implementing tariffs on steel and aluminum,. This has brought trade issues to light recently. Here are a few trends that you should expect to continue during the balance of 2018.

The Federal Reserve

Solid growth and the will to normalise interest rates will drive the Federal Reserve to increase interest rates at a moderate pace. Currently the average forecast from the Fed shows that rates will increase another two times in 2018. Rate hikes will begin to accelerate in 2019 and 2020. This should drive up the dollar. But recent declines in US treasury rates show the market does not believe the Fed is correct on its growth and inflation forecasts.

Increased volatility due to trade issues

The US finally announce a trade deal with South Korea. This was Trump’s first trade agreement. In the United States, the government is controlled by the Republican party, but this could change before 2018 is over. The President has the worst approval rating of any President in history at this stage of his presidency. This will not go unnoticed by voters when they go to the polls for the mid-term elections in November. A change in the ruling party structure will introduce additional volatility. The infrastructure plan, and many of the regulations that were rolled back by the Trump administration could go by the wayside if power changes hands.

In the forex markets, majors are likely to remain rangebound versus the dollar. Unless the Fed can continue to raise rates, the current rangebound conditions will continue to persist.