While the forex market may see an estimated $5.3 trillion every single day, more than 85% of all transactions feature just seven major currency pairings.
Perhaps unsurprisingly, all of these currency pairings feature the U.S. Dollar (USD), which remains the strongest and most popular asset in the marketplace. This trend is likely to continue throughout 2019, particularly given the way in which the uncertainty surrounding Brexit is restricting both the pound (GBP) and the Euro (EUR).
In fact, the spectre of Brexit and sustained geopolitical volatility is creating new opportunities for traders to profit in 2019. In this article, we’ll consider which pairings will deliver the most reliable returns in the coming months.
We start with what is arguably the most popular currency pairings in the world, namely the USD/EUR.
There are numerous reasons for this, with one of the most prominent being the fact that this pairing boasts the lowest spread among forex brokers such as Oanda.
On a similar note, this prominent pairing is also associated with the best technical analysis, meaning that even beginners can make informed and timely trades through their online accounts.
In the current marketplace, this pairing also offers investors an opportunity to profit from Brexit in the next few months. While it’s historically a low-volatility pairing, the EUR will continue to trade within a narrow range post-Brexit while the greenback continues to produce impressive returns.
Next up is another popular currency pairing, and one that’s also synonymous with traditionally low spreads.
It’s interesting to note that both the USD and the Japanese Yen (JPY) are relatively stable fiat currencies, while the latter has earned a reputation as a safe-haven during times of economic tumult for investors after gaining 20% in value during the great recession.
Conversely, 2019 is likely to see a relatively stable global economy, unless a no-deal Brexit takes a greater toll on countries throughout the world. This means that the USD/ JPY should see considerable gains during the second half of the year, as all but the most risk-averse investors look to capitalise on the strength of the greenback.
Just keep a watchful eye on the global economy before making a commitment, as a worldwide Brexit fall-out (or an acceleration of the trade war between the U.S. and China) could demand for the JPY increase considerably.
The beauty of forex trading is that you can leverage the derivative nature of currency to profit even in instances where values depreciate.
This is ideal for day traders or investors with a short-term outlook, who can leverage the decline of a specific pairing to achieve considerable profit.
With this in mind, the AUD/USD may offer a tremendous opportunity to investors, who can hedge against the Australian Dollar whilst trying to capitalise on the strength of the greenback.
This pairing has already extended a recent decline during the first week of March, having failed to breach the barrier of 0.7021.
If this trend continues and the U.S. economy continues to perform consistently well, traders can successfully hedge against the AUD and enjoy a profitable 2019.