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jobalertshopCurrency trading is a lucrative market, with trillions of dollars being exchanged every day. As we enter 2021, it is important to be aware of the currency pairs that will potentially have the greatest impact on the market. In this article, we will examine the top currency pairs to watch in 2021 based on expert predictions and analysis.
- USD/EUR
The USD/EUR, also referred to as the Euro-Dollar or the Fiber, is considered to be the world’s most heavily traded currency pair. It consists of the US dollar and the euro, the currency of the European Union. The dollar is the world’s dominant reserve currency, while the euro is the second-largest reserve currency.
In 2020, the euro had a strong run against the US dollar. The currency benefited from the EU’s 750 billion euro stimulus package, which helped in boosting investor confidence in the eurozone’s economy. However, the US dollar is expected to recover in 2021, as the US economy is anticipated to recover from the pandemic-induced recession.
- USD/JPY
The USD/JPY is the second most traded currency pair globally. It consists of the US dollar and the Japanese yen. Japan’s economy is export-oriented, which means that it is highly dependent on external demand. The US serves as Japan’s largest export market, which is why this currency pair is closely watched.
In 2020, the USD/JPY pair was largely driven by the US-China trade war, as well as the impact of the pandemic on both countries’ economies. In 2021, the US-China trade relationship is still expected to have a significant impact on this currency pair, as well as Japan’s economic recovery post-COVID-19.
- USD/CAD
The USD/CAD is the third most traded currency pair globally. It consists of the US dollar and the Canadian dollar. Canada is a significant producer and exporter of natural gas, crude oil, and other commodities. The price of these commodities is a crucial determinant of the CAD’s value.
In 2020, the USD/CAD pair was influenced by the oil price crash and the COVID-19 pandemic. The pair also saw volatility due to the Bank of Canada’s interest rate cuts, which were aimed at stabilizing the Canadian economy. In 2021, the pair will likely be shaped by the strength of the global economy, as well as ongoing supply and demand shocks in the oil market.
- GBP/USD
The GBP/USD is the fourth most traded currency pair globally. It consists of the British pound sterling and the US dollar. Brexit uncertainty has weighed heavily on the pair in recent years, with the pound experiencing significant volatility against the US dollar.
In 2020, the GBP/USD pair experienced significant volatility due to the COVID-19 pandemic and Brexit concerns. The pair also saw movement due to the U.S. election results. In 2021, the pair will be influenced by the ongoing Brexit negotiations, vaccine rollouts, and global economic recovery.
- AUD/USD
The AUD/USD is the fifth most traded currency pair globally. It consists of the Australian dollar and the US dollar. Australia’s economy is heavily reliant on commodity exports, which makes the country sensitive to global trade tensions.
In 2020, the AUD/USD pair was influenced by the pandemic’s impact on global trade and a slowdown in China’s economy. In 2021, the pair is forecasted to rise due to the economic recovery in China and the US, as well as the positive sentiment surrounding commodity prices.
Conclusion
As we move into 2021, currency traders should closely monitor the above currency pairs. Establishing a comprehensive understanding of the underlying factors that influence currency pairs enables traders to devise well-informed trading strategies. By focusing on these five currency pairs, traders can take advantage of the market’s opportunities and form positions that align with their trading goals. While no one can predict the future, it’s essential to base trading decisions on relevant and current data.
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