There is a fairly consistent seasonality to the Forex Market (trending, non-trending, trending) and 2017 delivered beautifully with an increase in volatility and pre-summer pushes that offered some trends and even some extremes. With June around the corner the adage "sell in may - go away" may help the markets insert some seasonal highs and lows where we can expect to see a lull in volatility, retracements from these pushes, and ranges to trade.
The USD has been battered and bruised during the pre-summer push as the EURUSD and USDCHF venture into key support and resistance levels. The EUR was was of the big winners with a major breakout above 1.1000. April-May have witnessed risk aversion from a variety of sources including but not limited to the Trump Administration scandal, stock market 1%+ selloff and scare, VIX spike, tensions in Middle East, Russia, and North Korea, and surely there will be others (ongoing Brexit woes for one).
I am most interested in observing how dramatic the slowdown may be day to day in the markets after several weeks of reasonable volatility. Summer tends to bring a slowdown, ranges, consolidation, choppy price action, etc. so traders either adapt to the conditions or go on vacation and await an August/September volatility boost. If a slowdown is upon us, the markets may favor yield, so look to currencies with carry. Of the majors, NZD/AUD/USD lead the pack with 1.75%/1.50%/1.00% respectively. Although the USD has had a dark cloud overhanging since a Presidential jawbone, the Fed's desire to shrink the balance sheet, and everything being data dependent, the Fed may still stay the course with tightening monetary policy and provide some greenback some resiliency.
The Forex market is always interesting and my finger is always on the pulse trying to plan and prepare for what's next. Happy Trading and Happy Summer!!! CLICK HERE to see the supporting video.
Before deciding to participate in the financial markets, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose. There is considerable exposure to risk in any off-exchange foreign exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection, and market volatility that may substantially affect the price, or liquidity of a currency pair or financial instrument. Moreover, the leveraged nature of trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin requirement, your position may be liquidated and you will be responsible for any resulting losses. Trading financial markets on margin carries a high level of risk and may not be suitable for all investors. Past performance is not indicative of future results. Any statements regarding income, whether expressed or implied, do not represent a guarantee. Any opinions, news, research, analysis, prices, or other information provided is deemed general market commentary and for educational purposes only, and does not constitute investment advice or solicitation to buy or sell any contracts or securities or any type.
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