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US dollar price forecast 31 March 2021

2021-03-31

2021-03-31

Forex in April: US dollar weakens. Forecast for USDCAD, EURCAD, USDNOK, USDSEK, GBPUSD, GBPCHF and EURGBP as o…Dmitri Demidenko

The seasonal factor suggests that the competitors of the US dollar in April will gradually recover. Which of the G10 currencies will look better, and which will look worse than the others? Let’s discuss the market outlook and make up a trading plan.

Monthly G10 currencies fundamental forecast

Statistical analysis with a fundamental focus worked out well in [March][1]. First, the assumptions about the weakness of the euro came true. Profit from [EURUSD][2] (+3.9%) and [EURCHF][3] (+0.5%) sales offset the loss of [EURJPY][4] (-0.5%) shorts. Secondly, the assumption that China’s problems will cause a panic of [NZDUSD][5] and [AUDUSD][6] bulls also became true. Short trades on the NZD and the AUD yielded 1.5% and 2.8% of profit. Only the Norwegian krone managed to outperform the US dollar in early spring, which resulted in a 0.5% loss in [USDNOK][7] purchases. However, +7.7% to the value of the portfolio in one month is an excellent result! The more interesting it will be to study the seasonal patterns of April.

In the mid-spring, the currencies of the oil-exporting countries were among the best performers. The Canadian dollar and the Norwegian krone strengthened against the greenback in 32 and 30 cases out of 46, respectively. The success of the British pound and the Swedish krona, which managed to close the month in the green zone in 28 and 26 cases out of 46, respectively, is also impressive. By contrast, the rest of the European G10 currencies performed worse, with the euro and Swiss franc having negative medians and the worst averages. The sample base in the study is the period from 1975 to 2020.

Rise-fall periods

Source: BoE, LiteForex calculations.

Averages and medians

Source: BoE, LiteForex calculations.

During a favorable April period, the ‘loonie’ rate added 1.7% to its value against the USD, 2.1% against the NOK and the SEK, and 2.2% against the GBP. The euro, on average, fell by 1.7% at the time of closing in the red zone, while the CHF - by 2.1%.

Price dynamics during rise-fall periods

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Source: BoE, LiteForex calculations.

Despite the growth of the US dollar, [Brent][8] and [WTI][9] prices have not collapsed. In my opinion, this fact suggests that as soon as the greenback weakens, the oil price will rise. This will lead to a drop of [USDCAD][10], [EURCAD][11] and [USDNOK][7] prices. According to Bloomberg, due to rapid vaccination rates in Scandinavia and strong foreign demand, northern Europe’s GDP will exceed pre-pandemic levels during 2021. Norges Bank is likely to become the first central bank in a developed country to tighten monetary policy. The Riksbank may also follow its path. The Swedish central bank has repeatedly expressed dissatisfaction with the effectiveness of QE. These circumstances suggest that in the middle of spring, the NOK and the SEK prices will rise, resulting in a drop of [USDSEK][12] prices.

Despite the March correction, I continue to believe in the pound. Accelerated vaccination rates in the UK, where 34.5 million people, or almost 52% of the population, have already received at least one dose of vaccine, creates the preconditions for a quick opening of the economy. At the same time, massive fiscal stimulus and huge deferred demand reinforce confidence that UK GDP will boost. These factors allow me to recommend buying [GBPUSD][13] and [GBPCHF][14] as well as selling [EURGBP][15].

Price chart of GBPUSD 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. www.liteforex.com/blog/analysts-opinions/forex-in-march-new-shocks-are-coming-forecast-for-audusd-nzdusd-usdnok-eurusd-eurjpy-and-eurchf-as-of-25022021/
  2. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  3. my.liteforex.com/trading/chart?symbol=EURCHF&returnUrl=true
  4. my.liteforex.com/trading/chart?symbol=EURJPY&returnUrl=true
  5. my.liteforex.com/trading/chart?symbol=NZDUSD&returnUrl=true
  6. my.liteforex.com/trading/chart?symbol=AUDUSD&returnUrl=true
  7. my.liteforex.com/trading/chart?symbol=USDNOK&returnUrl=true
  8. my.liteforex.com/trading/chart?symbol=UKBrent_n&returnUrl=true
  9. my.liteforex.com/trading/chart?symbol=USCrude_n&returnUrl=true
  10. my.liteforex.com/trading/chart?symbol=USDCAD&returnUrl=true
  11. my.liteforex.com/trading/chart?symbol=EURCAD&returnUrl=true
  12. my.liteforex.com/trading/chart?symbol=USDSEK&returnUrl=true
  13. my.liteforex.com/trading/chart?symbol=GBPUSD&returnUrl=true
  14. my.liteforex.com/trading/chart?symbol=GBPCHF&returnUrl=true
  15. my.liteforex.com/trading/chart?symbol=EURGBP&returnUrl=true