COVID-19 and the Forex Market in 2021

In 2020, the new COVID-19 infection upset plans of both travelers and participants in the financial markets. Some managed to make money, while others saw their fortunes dive as they failed to navigate the new reality.

It is a mistake to assume that the volatile currency market and the coronavirus pandemic will stay in the outgoing year.

According to the World Health Organization as well as doctors and virologists around the world, the coronavirus will not fade away in 2021. Firstly, a year will not be enough to vaccinate the entire population of the planet.

Secondly, the world’s population will not be able to recover naturally in just one year. Thus, in 2021, the world will continue to combat the coronavirus spread.

The only difference is that it will not be a new challenge and something unknown.

The virus will already be a familiar foe. Moreover, the response of governments, regulators, central banks and, most importantly, financial markets will most likely follow a now-familiar pattern.

Now let’s go over the way the Forex market reacted to the coronavirus crisis in 2020 and assume how the currencies will behave in 2021.

In case the epidemiological situation aggravates, traders should focus on gold, the Swiss franc, and the Japanese yen. Many analysts believe that the latter will become the third asset for those who want to save capital and avoid risks.

The best tip for traders who made a profit in 2020 on the back of the global pandemic, is to do the same thing that they did last year but 2-3 months earlier.

In 2021, the peak of infection, or the so-called third wave, is expected to be in January-February. In any case, if you have managed to earn under such extremely difficult conditions, you will be able to beat the market again.

Those who took the risk but failed to reap gains, need to carry out more detailed fundamental analysis, since the technical one will be not enough due to the coronavirus-related situation. News is what can help you anticipate certain market activity.

For traders who cannot imagine their life without technical analysis, there is a tip as well. Many investors with such a skill apply it to infection records in different countries of the world, rather than to currencies.

This approach is quite productive. The virus and its spread are much more predictable than currency pairs’ movements, especially in the short term from 3 days to 2 weeks.

Use technical analysis (luckily, the data is available online) in order to find out beforehand that Brazil’s government is going to announce a lockdown in February.

Sell the Brazilian ​​real at the peak price, buy at the bottom, and then sell it again even in the middle of its movement. This will bring you a nice profit.

In 2020, market participants did the same when the United States reported millions of COVID-19 cases per week, while Canada reported less than a thousand cases per day. At that time, the USD/CAD pair enabled traders to earn good money.

In any case, 2021 is likely to be a year of shocks, risks, huge spikes, roller coasters, and other unpredictable things. All this makes the foreign exchange market the best way to make money on global processes and have fun at the same time.

What could be more global than the worldwide spread of the coronavirus pandemic? This is a historical time period that will be remembered centuries later.

Why not cash in on this with eyes on your trading platform rather than on TV?

Sincerely, Instaforex Group