Since the beginning of 2020, the world economy has been threatened by the Coronavirus. Forex markets are one of the victims of the coronavirus’s economic effects.
Even before COVID-19 becomes a concern, the currency markets are already a turbulent environment. As the pandemic spreads, though, it has become more volatile.
Now, considering the possibility of global recession, there might also be ‘currency wars.’ Governments and financial experts have been trying to figure things out to avoid this incident.
Back to forex markets, things also start to run differently as the price over-fluctuates a lot. So far, here is how coronavirus has affected the forex markets.
Forex Pairs Take a Beating due to Coronavirus
Ever since 2020 started, the same moment when COVID-19 outbreak happened, some pairs have been having a terrible start. Even if some currencies are considerably a safe haven, they also experience major volatility.
Aside from Chinese Yuan, some currencies also have a bad start. Among the pairs that suffer from the pandemic, EUR/USD, AUD/USD, and USD/CAD are poorly performing due to fears and other contributory factors.
Trading Strategies Might Need Some Adjustments
As the markets are at a worse situation than during US-China trade war, traders might have to make some adjustments. These adaptations, accordingly, might revolve around their trading strategies.
Despite everything, trading experts have warned traders to not heavily change their strategies. Instead, they advises traders to make some adjustments here and there so that they can survive in the highly volatile markets. Drastically changing strategies might result in unfamiliarity during trading.
Fears are ‘Driving’ the Markets
Emotions, including fears, have always been an integral part in forex trading. We probably have witnessed how fears affect individuals in making a trading decision, but now what we are going to see is how fears are driving the markets.
Take, for example, Europe. Some crashes have happened this month in stock and forex markets as coronavirus is aggressively spreading in the region. Investors and traders are beginning to search for their safe haven as risks are currently ‘intolerable.’ So far, the safe havens are Japanese yen and US dollar.
Writer: Doddy D. Wahyuwono
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