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US dollar price forecast 25 February 2021

2021-02-25

2021-02-25

Forex in March: new shocks are coming? Forecast for AUDUSD, NZDUSD, USDNOK, EURUSD, EURJPY and EURCHF as of 25…Dmitri Demidenko

The tendency for the greenback weakening is visible to the naked eye, but in early spring it is usually very strong. What if the statistics are contrary to fundamental factors? Let’s discuss the market outlook and make up a trading plan for [AUDUSD][1], [NZDUSD][2], [USDNOK][3], [EURUSD][4], [EURJPY][5], and [EURCHF][6].

Monthly G10 currencies fundamental forecast

[February][7] turned out to be another successful month for fans of statistical analysis with a fundamental components. Even though the pound did not confirm its weakness at the end of winter, the losses from its sale against the US dollar in the first half of the month and against the euro in the second were compensated by the profits from [EURAUD][8] (+ 2.7%), [EURNZD][9] (+ 2.4%) shorts, and also by [AUDUSD][1] (+ 3.2%) and [NZDUSD][2] (+ 2.9%) longs. The tendency for the greenback weakening is visible to the naked eye. The more interesting it will be to watch the beginning of spring.

The fact is that in March, the US dollar is often strong. Since 1975 it has strengthened in 26-27 cases out of 46 against such risky assets as the New Zealand dollar, the Australian dollar, and the Norwegian krone. In 2020, against the backdrop of the recession, the [AUDUSD][1] pair sank by 5.5%, [NZDUSD][2] by 4.7%, [USDNOK][3] by 10.8% (!). Are financial markets going to be in shock again?

Rise-fall periods

Source: BoE, LiteForex calculations.

Interestingly, among the best-performing currencies in March are the Swiss franc and the Japanese yen, which are safe-haven currencies along with the greenback. This further raises fears about the fate of world stock indices and the global economy. From 1975 to 2020, the CHF closed 26 out of 46 months in the green against the US dollar. The Swiss franc is the only G10 currency to have a positive median against the greenback. The Australian and New Zealand dollars and the Norwegian krona are among the outsiders based on this indicator.

Averages and medians

Source: BoE, LiteForex calculations.

In favorable periods, the Swiss franc strengthened by an average of 2%, the Japanese yen - by 2.6%. AUD’s losses were 2.5%, NZD’s - 3.3%, NOK’s - 2.4%.

Price dynamics during rise-fall periods

Source: BoE, LiteForex calculations.

When statistics signals go against fundamental analysis, this is a reason to think about the financial market’s situation and look for reasons for a correction. Buy US dollar only if they are worked out. What could scare [S&P 500][10] bulls and worsen global risk appetite? So far, I see two answers to this question.

Now it is time for Joe Biden to take a clear stance on China. Beijing is nervous about uncertainty, and from time to time, has breakdowns. Chinese Foreign Minister Wang Yi’s phrase that Washington’s interference in China’s domestic affairs resembles an attempt to thrust a knife and fork into the food on someone else’s plate may not have pleased the White House. The US harsh rhetoric towards China could trigger pullbacks in the commodity market, which, in turn, will lead to [AUDUSD][1], [NZDUSD][2] sales, and [USDNOK][3] purchases.

The second risk factor for greenback competitors will be the third wave of COVID-19, which the countries of Eastern Europe and Germany are talking about. Chancellor of Germany, Angela Merkel, has warned that Berlin must act with great caution to avoid the need for a new national shutdown. If the worsening of the epidemiological situation or the too slow lifting of eurozone lockdowns are expected, there will be grounds for selling [EURUSD][4], [EURJPY][5], and [EURCHF][6].

Price chart of AUDUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=AUDUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=NZDUSD&returnUrl=true
  3. my.liteforex.com/trading/chart?symbol=USDNOK&returnUrl=true
  4. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  5. my.liteforex.com/trading/chart?symbol=EURJPY&returnUrl=true
  6. my.liteforex.com/trading/chart?symbol=EURCHF&returnUrl=true
  7. www.liteforex.com/blog/analysts-opinions/forex-in-february-fighting-for-vaccine-flares-up-gbpusd-eurgbp-audusd-nzdusd-euraud-eurnzd-usdsek-forecast-as-of-28012021/
  8. my.liteforex.com/trading/chart?symbol=EURAUD&returnUrl=true
  9. my.liteforex.com/trading/chart?symbol=EURNZD&returnUrl=true
  10. my.liteforex.com/trading/chart?symbol=SPX&returnUrl=true