Positive Trends for Forex Trading Could be Expected for 2022

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Overview of global economy

While the year 2020 was largely characterized by falling markets, increasing unemployment rates and overall financial uncertainty across the globe, 2022 is expected to be more positive. As some countries recorded growth and recovery in 2021, the positive trajectory and outlook is expected to continue into 2022, unless the world faces further unprecedented conditions. Although growing in popularity and continuing to attract new traders daily, the forex market has been subjected to extreme conditions and times of high volatility of late, which invariably had an impact on the investments of many. As it is widely known, political, economic and social conditions do have an impact on the forex market, which explains the turbulences on the forex market in 2020.

As the global economy is said to be on the road to recovery currently, the forecast for 2022 is that this will continue. The global gross domestic product is anticipated to maintain its 6% growth rate in the coming year. When one looks at two of the key players in the global economy and the forex market, the EUR and USD, they have also fluctuated in recent months. As a currency pair, the EUR/USD increased between March 2020 and January 2021, however, a decrease in its value was then recorded at the start of November 2021. Although, this should not deter you from investing in the USD, as the US economy is expected to stabilise by the second half of 2022, alongside the Eurozone. This is mostly why trading USD and other top currencies is championed by many, as these economies tend to regain balance relatively quicker than those of developing countries. Industry experts suggest that developing countries are bound to face continued hurdles in the near future, as efforts are still underway to get the world back to some semblance of normalcy.   

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Forecast for forex trading in 2022

That being said, the forex market will be reflective of the global economic conditions, while some currencies will continue on a downward spiral and fail to bounce back, others will soar and prove to be quite lucrative for those who have invested in them. For example, given that the global risk appetite has returned, the USD is expected to benefit from this the most. This is because of its active role in the global economy and its several developing companies, amongst other things, which continue to boost investor confidence. On the other hand, the JPY is already being adversely affected by supply shortages for some of its car brands, as well as the global chip shortage that has also affected tech giants such as Apple. These are expected to continue to weigh heavy on the JPY. Despite this, as a currency pair, the USD/JPY has shown its resilience amid trying conditions. While still largely facing high levels of uncertainty, the strides being made to improve the conditions of the global economy, which will invariably have an impact on currencies and trading, the near-term outlook is promising. While the anticipated growth and recovery may still be adversely affected by financial stress and debt levels, there are some positive trends that investors can find comfort in.  

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