Volatility Observations and Insights

Volatility Observations and Insights


The month of December brought good winds to the Forex market, depending on the type of operation to be carried out. Both GBP and EUR soared, not only for vaccines already on the horizon but also for political reasons – the election of Biden, the Brexit deal, among others.

These changes and increases are not one-off, as the Covid-19 pandemic has given new life to the trade Forex trading since its inception. What has been seen is its perpetuation, with more and more people looking for information about how to be one trader Successful Forex.

That said, it is clear that a single doubt hangs in the minds of those who have already started or are about to start in the Forex market: what next?

No, you cannot predict with certainty anything that has to do with variable assets. Even so, it is possible to point out where future movements will have a relevant impact on the aforementioned volatility.

Where to pay attention in late 2020 and early 2021?

In summary, some parameters that have a good chance of impacting the Forex market will be demonstrated below. Like all trader you know, it takes a little more than quick tips to succeed. Keep up with the latest economic news in Europe, for example, is as important a job as knowing how to analyze the graphics.

So, take notes of the observations, add them to insights and keep up to date with the latest developments.

Unemployment inside and outside Europe

The EUR / USD pair, in particular, has been the focus of traders namely in several scenarios related to:

  • Production and distribution of vaccines against Covid-19
  • Biden and his political drive – like the appointment of Janet Yellen
  • US unemployment

Of these three, what is likely to have the greatest impact for the longest is the movement of unemployment claims in the United States. At the same time, as a result of a pandemic, unemployment figures in European countries can also weigh in the balance.

Therefore, updated data on unemployment in the main world powers are essential, especially those related to their specific currency pair.

The strength of the dollar

How do you test the strength of a currency like a dollar? Well, by means of indicators it is the most recommended method. Right now, the three sources of information that together measure the strength of the dollar and its path in the Forex market are:

  • United States interest rates
  • Unemployment, again
  • North American Stock Market

It didn't seem that easy to measure the strength of the dollar, did it? Well, there are still analysts who see a more emotional than rational movement in the Forex market. Therefore, continue to interpret analytically and not as a direction for absolute truth.

War against Covid-19

All of the above economic indicators and many others are directly linked to the war against the Sars-CoV-2 virus. The occurrence or not of more serious mutations or infections and the level of effectiveness of the vaccines will dictate how much the economy will recover in the coming months and years. For this reason, even health notebooks are of great value to traders Forex

It must be remembered that even before the classification as an epidemic, there was a certain tranquility throughout the world. Anticipating new announced catastrophes can help prevent bad decisions in the trade.

So, just as important as knowing how the European market is doing and what the new president of the United States plans, which is to monitor the development of the pandemic.

What to absorb from all this?

According to analysts, the movement of the market still shows signs of being more emotional than rational. Still, the volatility of the Forex market is not unpredictable as it may sound with these assumptions. There are important economic indicators and markers that have dictated the direction of the main currency pairs.

Those who not only reflect but also keep an eye on the updates of the above observations will certainly be able to perform well in the market.

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