About Us
Trading
Platform & Tools
Partner with us
Help
Create an account LOG IN
Loading...
No results

2024 Forex Market Insights

post content image

Read Time: 8 Minutes


Throughout the year of 2024, we’ve observed some significant economic shifts and global events that have influenced market movements in their own way. Central bank policies were front and centre, with the Federal Reserve, European Central Bank, and Bank of Japan steering market sentiment through interest rate decisions and inflation management.


Geopolitical events further intensified market volatility, from the U.S. presidential election to regional conflicts and global trade renegotiations. These developments highlighted the forex market's sensitivity to political transitions and international agreements – providing some great trading opportunities along the way, on the back of the resulting volatility.


There were talks of central bank digital currencies (CBDCs) and the integration of AI-driven trading tools, which brought us both opportunities and challenges, fundamentally altering how traders approach the market.


Economic indicators like inflation trends, employment data, and GDP growth provided critical insights into currency dynamics, while liquidity patterns and institutional trading flows shaped the forex market 2024 behaviour.


Table of Contents


Central Banks & Economic Indicators


Economic indicators continued to determine forex market 2024 movements. Inflation trends, employment data, and GDP growth became focus points for traders in their market analysis. However, central banks were the driving forces behind many of 2024’s forex movements. One of the key influencers being the Federal Reserve (FED), which continued to balance inflation management with economic growth. Its policy decisions caused notable fluctuations in the dollar index.


In Europe, the European Central Bank (ECB) adopted a measured approach, focusing on stabilising the eurozone whilst observing varying economic growth rates. Its quantitative easing measures influenced liquidity trends and regional currency movements.


Across the Atlantic, the Bank of England faced challenges as the UK’s post-Brexit economy dealt with a persistent level of inflation.


The Bank of Japan remained committed to ultra-loose monetary policies, maintaining pressure on the yen – of which was a prime contender in the carry-trade space. Meanwhile, several emerging economies grappled with inflationary spikes, prompting central banks in countries such as Brazil and India to tighten policies.


Inflation remained a dominant theme, with central banks in developed and emerging markets adjusting their policies to manage rising prices. The U.S. inflation rate, in particular, was a critical driver of Fed decisions, indirectly shaping the dollar's global standing.


Whilst the U.S. demonstrated moderate growth, China’s slower-than-expected recovery impacted commodity-linked currencies like AUD and CAD. In addition, trade balance data highlighted the fragile state of international trade, further complicating currency dynamics.



Geopolitical Influencers



One of the year's most impactful events was the U.S. presidential election, which drove volatility across global markets. Policy discussions on trade agreements and economic reforms led to fluctuations in the USD, particularly against currencies like the euro and yen. With President Donald Trump still in the process of taking office, we can expect to see further geopolitical developments and forex price movements as we head into 2025.


Regional conflicts and political transitions also applied pressure on currencies. A key one being the tensions in Eastern Europe which influenced the euro's trajectory, whilst political instability in the Middle East affected oil-exporting nations' currencies such as the Russian Ruble and Canadian Dollar. In addition to this, trade agreements, such as renegotiations between key Asia-Pacific economies, created ripple effects in commodity-linked currencies like the Australian and Canadian dollars.



Forex Market 2024 – Behaviour Analysis



The forex market 2024 exhibited unique behavioural trends, characterised by pronounced volatility and evolving liquidity patterns. Traders observed spikes in volatility following key central bank announcements and geopolitical events, which created both challenges and opportunities.


Liquidity trends shifted significantly, with institutional trading flows dominating high-volume trading periods. Cross-border capital movements also surged, driven by divergent economic recoveries among regions. For instance, the U.S. attracted significant foreign investment due to its relatively stable economic outlook, bolstering the dollar’s strength against other major currencies.


Technological advancements further influenced market behaviour. AI-driven trading platforms improved trade execution efficiency, while blockchain technology introduced greater transparency in cross-border transactions. The digital currency evolution has added another layer of complexity, as traders adapted to the increasing integration of CBDCs into mainstream markets.


These behavioural insights reveal the dynamic nature of the forex market in 2024, emphasising the need for traders to remain agile and leverage advanced tools for navigating this ever-changing landscape.



A Technical Recap


In addition to observing the fundamental influencers of 2024, we can put it all into context by observing the daily chart for the year.

  

DXY 


undefined

EURUSD

undefined

As expected, the US Dollar movements were inversely correlated with the EURUSD reaching a high of 1.12140 and a low of 1.03332. 



AUD & NZD 


undefined


Our Aussie dollar has provided some fantastic trading opportunities this year – with range-bound strategies taking advantage of Q1 & Q2, before trend-following strategies amplified those returns with the increased volatility in Q3 & Q4, resulting in a high of 0.69424 for the year, and a low of 0.63482. 

undefined


Across the ditch, the Kiwi Dollar has performed very similarly, with a high of 0.63788 and low of 0.57971. 



undefined

 

GBP


The trend was your friend for the GBP this year – providing a long-term bullish trend, before reversing to a now-downward trend. A prior low for the year at 1.22996 was met with a resulting high of 1.34342 at the conclusion of the bullish trend. 




CHF &  JPY

undefined



Love it or hate it, the Swiss Franc was a trend traders’ dream this year, with a bullish trend providing a high of 0.92244, followed by a resulting down trend reaching a low of 0.83744.

undefined


We all know the story with the Yen this year, including multiple instances of intervention by the BoJ. Whether you’re taking advantage of the carry trade, or simply riding the trend, we saw textbook trending reaching a high of 161.951 and a low of 139.579 for the year. 




Conclusion – Lessons From 2024


The 2024 forex market has been a year of developments, from central bank policies, economic indicators, geopolitical events, to technological advancements...


Disclaimer: Economic conditions are complex and rapidly evolving. This overview provides an educational perspective based on available information as of late 2024.

We’ll never share your email with third-parties. Opt-out anytime.

Relevant articles

Market Analysis
post image main
Strategic View: Planning For 2025

Read Time: 7 - 9 Minutes.


There’s already been some fantastic volatility in the forex market this year – mainly attributed to Trump, but also ongoing discussions around monetary policy in key economies. 


Even if you’re a short-term trader, it’s important to look ahead and form a strategy for the year. There’s currently a convergence of high U.S. real yields, central bank policies, and geopolitical risks that all traders need to keep on their radar. 


In this post, we will discuss the current themes for 2025, as well as identify ways in which we could capitalise on them. 


 

  1. The U.S. Dollar’s Strength and Global FX Implications 

The dominant theme in the FX market this year is the continued strength of the U.S. dollar (USD), fuelled by not only by Trump, but also high real interest rates and economic divergences.


Following what’s called the "red sweep" in the 2024 U.S. elections, markets have shifted expectations towards persistent USD strength in the first half of the year​. 


There’s several factors contributing to this trend: 


  • High U.S. Real Yields: Elevated interest rates in the U.S. continue to attract capital inflows, ultimately reinforcing the greenback’s strength. 

  • Diverging Monetary Policies: Whilst the Federal Reserve remains cautious about rate cuts, the European Central Bank (ECB) and Bank of Japan (BOJ) are expected to ease policy further. 

  • Tariff Risks and Trade Policies: Anyone watching the headlines would be aware of Trump’s recent rampage on tariffs – these new tariffs could further support the USD by dampening foreign currency demand. 

Volatility Strategies will be the play here, with policy uncertainty and trade negotiations in the air, options-based strategies such as straddles or volatility swaps on USD pairs could become very attractive. 

 

2. Carry Trade Opportunities in High-Yielding Currencies 


With real interest rate differentials widening, carry trades remain a key theme in 2025. The market is favouring currencies with strong yield advantages, such as the U.S. dollar and select emerging market (EM) currencies. 


Key High-Yield Currencies: 

  • USD: The dollar’s rate advantage makes it a prime funding currency. 

  • CAD: Despite trade risks, Canada’s interest rate environment remains somewhat supportive. 

  • NOK: The Norwegian Krone has shown improved carry appeal, as a result of Norges Bank resisting an aggressive approach to rate cuts​. 



Trading Strategies: 

  • Long USD/MXN or USD/ZAR: With emerging market currencies under pressure due to trade risks and high U.S. rates, going long USD against the Mexican Peso (MXN) and South African Rand (ZAR) could prove to be profitable. 

  • Short CHF or JPY in Carry Trades: Both the Swiss Franc and Japanese Yen are likely to underperform against high-yielding currencies due to negative real rates​. This could provide some attractive carry trade opportunities. 

  • NOK/SEK Call Spread: As Norway’s interest rate stance is firmer than Sweden’s, NOK/SEK longs could offer potential upside​. 

 


3. The Euro’s Structural Weakness and Political Uncertainty 


The euro (EUR) remains vulnerable this year due to a combination of economic underperformance and political instability. 


Key Risks for the EUR: 

  • Interest Rate Divergence: The ECB is expected to continue cutting rates, whereas the Fed remains on hold, for now. 

  • Trade War Exposure: Europe is a primary target for new U.S. tariffs, which could add to the weakening of the Euro. 

  • German and French Political Uncertainty: Domestic political risks, including German elections and policy uncertainty in France, add further downside pressure to the euro​. 



Trade Idea: 


Short EUR/JPY 


A graph of a stock market AI-generated content may be incorrect. 

Figure 1 – EURJPY Weekly Chart 


Given Japan’s relatively stable policy outlook and Europe’s tariff risk, going short EUR/JPY remains a key trade. 



Long EUR Volatility 


A graph of a graph AI-generated content may be incorrect. 

Figure 2 – Euro Volatility Index, daily chart 


For options traders, the euro’s downside risks make long volatility positions an attractive hedge against geopolitical shocks. 

 


4. Commodity Currencies 


Commodity-linked currencies such as the Australian Dollar, Canadian Dollar, and Norwegian Krone face some unique opportunities in 2025. 



The Oil Market’s Influence on FX 


Analysts are expecting crude oil markets to remain tight, with OPEC aiming to balance the supply and demand​. In doing so, this could lend support to oil-linked currencies such as CAD and NOK, provided that global demand remains resilient. 

Gold and Safe-Haven Flows 




A graph showing the price of a stock market AI-generated content may be incorrect. 

Figure 3 – XAUUSD (gold), daily chart 




Gold prices have surged in early 2025 – driven by fears of tariffs, geopolitical tensions, and central bank buying​. Whilst this supports the Australian Dollar to some extent, rising U.S. yields could ultimately cap AUD/USD upside. 



Trade Ideas: 

  • Long USD/CAD on Tariff Risks: The potential for broad U.S. tariffs on Canada could weaken the CAD, making long USD/CAD a defensive play over the long-term, especially given the bullish strength of the USD. 

  • Long Gold as a Hedge: With tariff risks escalating, gold remains a strong hedge opportunity against geopolitical uncertainty. 

 



5. Geopolitical Crossroads and FX Volatility 


Beyond macroeconomic fundamentals, geopolitical risks continue to hold the FX market at ransom in 2025. There’s potential for volatility to stem from: 


  • U.S.-China Trade Tensions: Renewed tensions from Trump could weigh on the Chinese Yuan (CNY) and ultimately spill over to other Asian FX markets, such as the AUD and NZD​. 

  • European Political Shocks: Elections in Germany and France could provide sharp moves in the EUR. 

  • Middle East and Energy Market Risks: Any disruptions to oil supply chains would adversely affect energy-linked currencies, such as the CAD. 

Trade Idea: 


Long USD/CNH 


A line graph with black and purple lines AI-generated content may be incorrect. 

Figure 4 – USDCNH, weekly chart 



Continued pressure on the Chinese economy and potential U.S. tariffs could push USD/CNH higher​. It would be wise to look for long opportunities above 7.375. 

 



Final Thoughts 


As we take on 2025, having an understanding of the key macroeconomic drivers, central bank policies, and geopolitical risks is no longer ideal, but necessary. 


  • USD strength remains a dominant theme, with potential for reversals in Q3 & Q4 this year.. providing that the Fed pivots. 

  • Carry trade opportunities favour high-yielding currencies, whilst funding currencies like JPY and CHF face ongoing pressure. 

  • The euro still remains vulnerable as a result of policy divergences and political uncertainty. 

  • Commodity currencies require a more careful approach – with CAD and NOK benefiting from oil strength, whilst AUD could be exposed to further downside risks. 

  • Geopolitical tensions add more ammunition to FX volatility – with the potential to either create more trading opportunities, or disrupt market structure.  


By keeping these key themes in mind, we’re able to form a more structured approach to 2025. Whilst there’s been some appealing moves in the market so far, there’s still plenty of room for trend changes and unexpected volatility. The key going forward is to stick to your trading plan, but expect the unexpected – especially as we begin to see the economic effects of Trumps’ executive orders. 


If you haven’t done so already, check out our post on Economic Indicators here. 


20/02/2025
Market Analysis
post image main
Trump’s Return: What Forex Traders Need to Know About the New Administration


Read Time: 6 minutes


Donald Trump’s return to Office as the 47th President of the United States marks a significant political and economic shift, creating both opportunities and challenges in the forex market. 


Trumps second-term agenda, marked by aggressive trade policies, tax reforms, and deregulation, has the potential to impact global markets in complex ways, especially the foreign exchange market. Fear not; there will be plenty of opportunities to accompany any disruptions that the Trump Administration will bring.

One of Trump’s most critical economic agenda’s is his renewed focus on tariffs. As during his first term, Trump has emphasised targeting China, with plans to raise tariffs on Chinese imports by 10–15%, ultimately increasing tensions between the two nations.


Why does this matter?


China’s economy has direct and indirect influences on markets, primarily through global trade. In 2024, China's foreign trade reached new heights, with total goods imports and exports amounting to 43.85 trillion yuan (approximately USD $6.1 trillion), marking a 5% increase from the previous year. Exports grew by 7.1% to 25.45 trillion yuan, while imports saw a 2.3% rise to 18.39 trillion yuan.

The trade surplus expanded significantly, reaching a record $992 billion, driven by a surge in exports, particularly to the U.S. So, you can imagine how Trump’s focus on tariffs could affect this.

Other proposals include broad tariff hikes, with some extreme scenarios suggesting across-the-board levies of up to 10% or a staggering 60% on Chinese goods. Such moves, while aimed at protecting American industries, carry substantial implications for global trade flows – which will of course affect currency rates.

The U.S. dollar, often a safe-haven currency as we know it, has provided an impressive bull-run recently;

undefined

Figure 1-DXY (US Dollar Index) Daily Chart



There are essentially two scenarios:

  1. A weaker USD

    In his first term as US President, Trump openly said the dollar (USD) was too high. And now, in his second term, he’s singing the same tune. This could provide some fantastic opportunities for us forex traders – especially when currencies such as the AUD and NZD are severely undervalued.

  2. Continued dollar strength

    We could see further strength if global investors react to heightened uncertainty and anticipated inflationary pressures.

Overall, it’s likely that continued tariff increases will disrupt supply chains and weigh on U.S. economic growth, potentially weakening the dollar in the long term.

In addition to trade, Trump’s fiscal policies have the potential to impact currency prices. The extension of the 2017 tax cuts, along with potential new tax breaks, is expected to stimulate economic growth in the short term but could also widen fiscal deficits, already exceeding 7.5% of GDP. Higher government borrowing to finance these deficits may push up U.S. Treasury yields, attracting foreign capital and boosting the dollar. Yet, sustained fiscal imbalances could lead to long-term concerns over debt sustainability, ultimately eroding confidence in the greenback.

The Trump Administration’s approach to deregulation is yet another factor likely to influence forex prices. Trump’s plan to roll back Biden-era regulations across sectors such as energy, finance, and manufacturing aims to reduce costs for businesses and encourage investment. This deregulation, in addition to tax cuts, could lift business confidence and support equity markets, creating a risk-on environment. In such scenarios, higher-yielding currencies such as our Australian dollar and the Canadian dollar could potentially benefit from improved sentiment and rising commodity prices.


How to Trade Trump 2.0


Monetary and Fiscal Policy Signals


So far, Trump has been on a war path signing off executive orders and pushing to make change. Given that currency markets are influenced by macroeconomic and geopolitical events, it’s imperative to keep an eye on the headlines for potential shifts in monetary and fiscal policies. In doing this, we can stay one step ahead.


Look for Hedging Opportunities


Trump’s presidency previously brought unexpected shifts in international relations, creating geopolitical uncertainty that could impact the forex market; during such times, safe-haven currencies such as the CHF or JPY are typically reliable options. Additionally, if Trump reinstates policies that favour U.S. energy independence, oil-exporting nations such as Canada (CAD) or Russia (RUB) may see increased currency volatility tied to changes in commodity markets.


Be Prepared and Adapt


Trump’s criticism of the Federal Reserve for maintaining high interest rates during his first term suggests potential attempts to influence monetary policy, making the Fed’s reactions critical for USD movements. Policies promoting growth or supply-side inflation could drive rate adjustments, adding to forex market volatility. As traders, we need to be prepared – we know Trump is a bit of a loose cannon, but we also need to adapt to changes in market structure and macroeconomics.


News and Risk Management


Taking all of this into account, we traders need to keep one eye on the news headlines, and one eye on the markets. Stay up-to-date with major news events and avoid trading within close proximity of them, reducing exposure on any open trades.

In the months ahead, expect volatility and surprises. Trump has never been more motivated in improving things for the United States. Given that the greenback is the most important currency to watch, we traders need to be prepared for anything that he throws at us. Traders need to embrace the volatility, identify trends, and keep an eye on the macro-economic influencers that ultimately drive the pricing of currencies.

We provide our clients with an economic calendar and other tools to succeed in the markets – find out more by clicking here.
04/02/2025
Ready to Start Trading?
Get started live or get a free demo
GET A LIVE ACCOUNT OR TRY A FREE DEMO