Trading Ideas

If you want to invest in either crypto, forex, or both, it’s important to know the difference. You might want to broaden your portfolio, but to do this, you should know exactly what you’re investing in. Learn all about the difference between forex and crypto here.

The forex market is one of the largest markets in the world. Investing in foreign currencies has been around for a long time. As technology has improved and accessibility changed, many more traders have begun investing in forex. Today foreign currencies are a very common part of a portfolio amongst active investors.

There are many interesting things about forex trading. It’s a 24-hour market with high liquidity and high leverage. Opposite the stock market, for example, you can trade more or less when you want to. When that’s said, it’s also a volatile and risky market, which is something to be aware of when getting into forex trading. You can read all about forex trading online.

The difference between forex and crypto

If you’re interested in investing in forex, you’ve probably considered trading cryptocurrency as well. Many think of the two as somewhat connected types of investments. But it is important to understand the clear difference between the two if you want to invest in either/or.

There are similarities between the two types of markets since they’re both based on currency trading. But the forex market is much older than the crypto market. It’s more established and well tried and tested. The crypto market is fairly new and more volatile. That’s why it’s important not to think of the two things as the same. It could end up being quite an expensive lesson. If you are a beginner in investing in forex, you can find specific tips and information here.

High liquidity, volatile markets

The two types of investment have plenty of similarities. This is also why it’s often the same types of investors who find both markets interesting. You can get into both markets with a relatively low amount to start with. This is highly recommended for beginners. If you don’t have a lot of experience trading, it can be hard to know when to invest and when to sell. This is the key to successful trading in both markets. You will make your money from the difference in price rates when you buy and sell.

It is the fluctuating rates of different currencies that make these markets so volatile and therefore risky. Both markets have very high liquidity, so if you’re a risky and talented investor, there can be a lot of money made from investing in both forex and crypto. Both markets are in extensive growth at the moment, so it’s not a bad time to get started investing if you want to diversify your portfolio. Just know that both types of markets require high activity if you want to make real money here. Passive investors will want to choose other markets to do their investments in.

Trends in the market are cyclical. Sometimes, a currency pair or cryptocurrency is hot, experiencing a long and strong trend. At other times, trends turn sideways and become boring.

An example of a hot and popular trend right now is passive investing via the best staking crypto on Bybit. Staking crypto means your tokens will earn interest and all you need to do is hold on for the long term.

While this is relatively new in crypto, buying and holding an asset to earn interest is not a new strategy and has been used in FX for decades.

The common theme between hot and cold trends is that the strategies used to trade them in FX can also be applied in crypto. Below, we review five strategies used in FX that you can implement in crypto too.

5 Forex Trading Strategies You Can Use in Crypto Trading

Forex traders are really good at reading the charts to identify the trends. Some trends are extremely long while others are sideways. A good trader will recognize the market conditions and apply a strategy that fits that market environment.

Fortunately, these tried and tested strategies from FX can also be applied and used in crypto. Below, are five popular FX strategies, and let’s discuss how they can be implemented for cryptocurrencies.

• Breakout trade
• Carry Trade Strategy
• Day Trade
• Swing
• Range trade

Strategy 1: Trading Breakouts on Metaverse Crypto

Generally, within FX, there is a currency that is in a strong trend. The same phenomenon applies to crypto too. For example, for the past several months, metaverse crypto has been an extremely hot trend. Traders were scrambling to learn more about the metaverse and which cryptocurrencies serve these communities.

Once these hot trends are identified, a tried and tested strategy that is quite effective can be applied to the metaverse crypto or other hot trends is called “trading breakouts.” The trader will draw horizontal resistance above a recent high or the all-time high. When the market breaks above the resistance level, they buy. The benefit of this strategy is that it allows the strength of the hot trend to push the market higher.

Strategy 2: Passive Income

Carry trading was a popular FX strategy prior to the Great Financial Crisis of 2008. FX traders would swap out the lower interest rate currency to buy higher interest rate currency. FX traders would earn interest income on the difference between the two currencies’ interest rates.

A similar type of passive income is available in cryptocurrencies too. After you buy crypto, you can stake that crypto to earn interest. Regardless of whether the value of the crypto moves up or down, your investment is earning interest in the native token. If the token’s value increases, then you are receiving interest on an appreciating asset. If the token’s value decreases, your interest earned will help cover a portion or all of that capital loss.

Strategy 3: Day Trading Smaller Trends

Like FX, crypto is traded 24 hours per day. Day traders begin their day by assessing news and what big trends are developing. Then, after reviewing the charts, these traders will set up their entry and exit points based on the shorter-term trends on the charts.

Day traders will open and close their trades typically within a day and definitely within two days. Their goal is to repeat a process over and over, picking up bits and pieces of the larger trend to grow their account balance. As a result, a day trader only cares about the trends that would last for the next several minutes to hours.

Day trading is very popular within crypto too. Many times, the strategy used to day trade FX can also be used in crypto as both markets are very technical. With over 12,000 cryptos available, a good screener is needed to spot the big trends taking place on that day.

Strategy 4: Swing Trading

A common starting point for newer FX traders is learning to swing trade. The margin for error is a little bit more forgiving in swing versus day trading. This is because traders don’t have to babysit and watch every tick of the market. Swing traders can set their entry and exit levels, then turn off the monitor.

Swing strategies also work when trading crypto. The technical indicators used in a swing strategy such as the MACD, RSI or Stochastic will be used the same way for the crypto markets. Since crypto trades 24 hours per day, it is helpful to implement a strategy that allows you to step away from the computer so you can keep your focus and not burn out.

Strategy 5: Range Trading

Range trading is the opposite of breakout trading. Sometimes, the market trades sideways with no real direction. For FX traders, this could be the result of two countries that are strong trading partners with one another and both countries are experiencing similar trends. Sideways trading could also be due to illiquid times of day when trading activity is muted.

Within crypto, ranges will develop too. After a long and strong trend, the market may trade sideways to consolidate those gains. The sideways consolidation will frustrate the long traders forcing them to close out setting up the next large advance. Also, there are times during the day or over the weekend when trading volumes are low creating a lack of buyers or sellers to push the market.

Conclusion/Takeaway/Final Words

The FX and crypto markets have a lot of similarities. Both markets trade 24 hours per day and are highly technical markets. Crypto will experience hot and cold trends just like FX. As a result, this allows the strategies used by FX traders to also be used in crypto.

One of the most versatile indicators used by technical analysts and chart readers is the moving average. There is a variety of moving averages to choose from such as the simple, exponential, or hull moving average and most other indicators include a moving average in their calculation.

The moving average can be applied to any chart time frame from monthly down to 1-minute charts. As a result, the moving average indicator is arguably the most popular indicator used by forex and crypto traders.

Over the next few minutes, we will review what the moving average is, how to read it, and some strategies a forex or crypto trader can use with it.

How to Read the Moving Average Indicator

The moving average is a formula used to calculate the average of a market’s movements over a period of time to identify the direction of the trend and potential buy/sell zones.

There are several types of moving averages and the two most popular are the simple and exponential moving averages.

Fortunately, you don’t have to make the calculations as the charting software will do that for you.

However, the main difference between the simple and exponential is how responsive the moving average is to the current price.

For example, a simple moving average is a simple average of the prices for a certain period of time. However, the simple moving average can be slow to respond to quick changes in the market. Therefore, the exponential moving average was developed to respond quickly to abrupt price movements by weighting the recent prices more heavily.

Each type of moving average will include a “look back” input period. This alerts the formula for how many data points to incorporate into the calculation. Two common input periods are 50 and 200, but any whole number can be used in the calculation.

Once the trader has decided the type of moving average and the look back input for the moving average, a line will be displayed on the price chart. This line can identify several useful items.

For example, the direction the line is pointing will indicate the direction of the trend. If the line is pointed higher, then the trend is said to be up and vice versa for a downward sloping moving average.

Additionally, the current price level of the line can act as support and resistance indicating price levels to buy or sell.

Importance of MA Indicator in Forex & Cryptocurrency

Due to the flexibility and versatility of the moving average, it is one of the most popular indicators used by forex and cryptocurrency traders. Aside from the flexibility of customizing your own look back input period and the versatility of using it on any chart time frame, the moving average helps you determine the direction of the trend and hence, the side of the trade to be on.

Additionally, the moving average can identify price levels such as when prices are oversold and overbought which can help predict rallies and corrections.

Trading crypto with the moving average is quite simple.

1. Log into your account with a top crypto exchange such as Bybit. Pull up a price chart of the digital asset you are wanting to trade within the daily time frame.
2. Apply a 20, 50, 100, or 200-period simple moving average to your chart.
3. When the moving average is pointed higher, it can be a signal to buy and vice versa.

Using MA Indicator with Other Trading Strategies

The moving average indicator is extremely useful and can be used as a stand-alone strategy. However, the crypto market is notorious for wild and volatile price swings which can wreck the nerves of traders and their account balance. Therefore, when learning to trade crypto, traders will apply other indicators to help make the trends and signals clearer.

If you are new and want to learn crypto trading, consider these strategies to help you get started.

The Moving Average Crossover Strategy 

If one moving average is good, then two should be better. The single-moving average on the price chart is susceptible to frequent false signals in a sideways market. At times, crypto will make a large price move only to retrace that trend shortly thereafter.

These volatile moves can place traders using a single moving average in a bad position.

As a result, adding two moving averages to the price chart of different lengths will allow the trader to assess the direction of the trend without whipsaws. For example, add the 50 and 200-period moving average on the chart. When the 50 line crosses above the 200 line, then the trend is said to be up and traders will want to buy. When the 50 line crosses below the 200 line, the trend is said to be down and traders will want to sell.

The ADX Moving Average Strategy

Moving averages provide excellent signals in trending markets. The nemesis to a moving average are sideways ranges. One way to filter out sideways ranges is using an indicator called the Average Directional Indicator (ADX).

Apply the ADX to your chart and when it moves above a reading of 20, then the market is trending and the moving averages will provide better signals. If the ADX is below 20, then a sideways range has developed and traders might want to ignore any moving average signals you receive.

Moving Average Convergence Divergence Strategy

The Moving Average Convergence Divergence oscillator (MACD) is a popular indicator that uses moving averages. This indicator combines several components into an easy-to-read signal generator.

It is another indicator that you can add to your price chart that appears in a window at the bottom of the chart. There are two lines on it that can be traded in a similar fashion to the Moving Average Crossover Strategy above.

When the leading line crosses above the lagging line, that is a bullish signal to buy. When the leading line crosses below the lagging line, that is a bearish signal to sell.

Conclusion/Takeaway/Final Words

Among forex and crypto traders, the moving average is one of the most popular indicators.

Traders looking to transition from forex and learning to trade crypto will typically utilize moving averages of some form within their strategy.

If you studied at the prestigious School of Pipsology, you probably know this already.

But if you’re new around here, let us point at the big elephant in the room:

Lambo wealth won’t come overnight, especially if you have a limited budget.

Pretty upsetting, right?

If you’re skeptical, let’s talk numbers…

Mr. Shawn Kalper is an eager disciplined trader. He manages to generate 10% profit per month accurately as a Swiss clock.

Wow, this guy is on fire! 🔥

Shawn is also a nice guy, he loves dogs, and he’s a science freak. His favorite quote is from Einstein:

Compound interest is the eighth wonder of the world

Of course, ’cause he knows that hitting a +10% per month consistently, after 3 years, would evolve into an astonishing +3000% profits.

But wait! Don’t buy your Hollywood mansion and lambo just yet!

Here’s your elephant:

It seems that our friend, Shawn, is having the life that every trading Youtuber wants, being profitable for 36 months in a row, generating a dazzling +3000% in profits, but…

If you started trading with a small account, let’s say with a small deposit of $100, you’ll soon realize that +3000% means a total balance of $3100.

Divide that by 36 months, it’s $86.11 per month.

That’s why we told you to hold on to that expensive mansion.

The way to wealth is a long, long-term game. However, if you’re confident about your trading skills, there’s something you can do to accelerate your trading career.

Have you ever heard of Funded Account Challenges?

For a small entry fee, you’ll get the chance to prove your trading skills for a trial period.

If you manage your risk while growing the account steadily, you’ll get funded by a trading firm, trading their capital in exchange for a rewarding profit split in your favor.

That means that with an initial budget of $250 you might be trading a $25K account in less than a month. And the good part is… you’re not liable for the losses.

But remember, the road to profitability is not that easy.

Trading firms out there might be bragging about funding everyone here and there.

Now ask yourself a question:

If you were a trading firm, would you give access to your funds easily?

Nope, you’d want to stay away from gamblers or stop-loss non-believers.

You’d probably fund traders that bring value to your trading firm, that generate consistent profits, fostering a happy win-win situation for everyone in the room.

So, how to choose the best trading firm out there?

Here are some tips and tricks to consider:

• Beware of challenges that are too easy or have no info about consistency. No real investor would entrust their capital to gamblers.
• Verify that the trading firm gives you a real account once you get funded. Many businesses prefer to award good traders with demo accounts. That suggests traders are being paid off money made in sales, and not with a genuine profit split.
• Make sure the rules to pass the challenge are written in black on white, with reasonable drawdown limits and profit targets.

I know we’re repetitive, but It’s not easy to make money in the market consistently, so make sure to try your Funded Account Challenge only when you’re fully ready and have tested your strategies on demo accounts for some time.

The rest will come naturally.

Whatever trading career you’ll choose, stick to it, improve it daily and success will come. Focus on the process. Keep on rocking and good luck.

Th e concept of “spread” is essential in financial markets, especially Forex. Without spread, most Forex brokers wouldn’t be able to operate normally.

What is a spread, how do Forex brokers define it, and what spread types are there?

What is spread?

There are two counterparts in financial markets, buyers and sellers.

Buyers want to buy an asset at the lowest price possible. Sellers, on the contrary, want to sell an asset at the highest price. These two sides create a buying price called Bid and a selling price called Ask.

Spread is the difference between Bid and Ask prices.

Spread = Ask – Bid.

How is spread defined?

The Forex market has hundreds of restrictions as it is the place for banks and financial institutions. That is why retail traders like you and me cannot get personal access to Forex trading.

However, there is a way — to use the services of Forex brokers.

Brokerages like FBS have an agreement with a liquidity provider that has access to the real Forex market. This company gives FBS a way to operate in a Forex market, providing broker’s clients with real prices of assets.

A liquidity provider gives FBS a price with a spread included, and FBS gives the price to its customers with this spread plus a little extra to cover the costs of the operation.

Every asset has a Bid and Ask price. When you buy an asset, FBS opens your order at an Ask price, and vice versa; when you sell an asset, FBS opens your order at a Bid price.

Every time you open a Buy trade, you must wait for an asset to go higher if you want to profit. More to say, you need to wait for the Bid price to reach the level where you opened an order (Ask price). That happens because your order is opened at an Ask price, which is usually higher than a Bid price.

Therefore, a spread can also be a fee for opening a trade because you “pay” the spread every time you open a trade.

Smaller spreads mean better conditions for traders. FBS has account types with spread starting from -1 point, which is incredibly convenient for all traders. These market-leading trading conditions help traders to perform better without worrying that the spread will shrink their profits.

What spread types does FBS offer?

As an international Forex broker with over 27 million clients, FBS offers spreads to satisfy every trader.

Fixed spread

A fixed spread is not changing and remains on the same level no matter what happens in the market. It is way more convenient for traders, especially in volatile times. So if you want to know your profit in advance, start trading with a Micro account.

Zero spread

A zero spread is a variation of a fixed spread. If you do not want to bother with spread calculations, choose a Zero spread account and pay no spread. However, a commission for the order opening is applied.

For example, if you want to open a XAUUSD trade on a Standard account, your spread will be around 22 points, meaning a 1-lot trade would cost you $22. On a Zero Spread account, you will pay a sum starting from $20 per each lot.

Floating spread

A floating or variable spread is a constantly changing value between Ask and Bid prices. In other words, the spread you pay for purchasing a currency pair fluctuates because of supply, demand, and total trading activity.

FBS offers a floating spread on a Standard account. Let’s say you want to trade EURUSD, the most popular currency pair. On the Standard account, EURUSD has a spread of 3 points and a typical (average) spread of 8 points. A 1-lot trade that has an amount of 100 000 in base currency would cost you only $8 worth of spread. That’s one of the best conditions on the market!

If you want to avoid doing math calculating spreads, try an ECN account with extremely low spreads starting from -1 point. There is a fee for opening a trade, but this account type is one of the most beneficial for traders who open ~1-lot positions because the fee is fixed, and bigger orders mean the exact costs.

What can you do with spreads?

The best thing you can do with your trading is to look for a broker with a low spread, as it is the main gauge of fees you will pay for your trading activity. FBS provides amazing spreads for the most popular trading pairs, making it easy for you to trade without worries.

Sometimes, floating spreads can get very wide due to market fluctuations. Experienced traders can execute a spread trade, opening a Buy and a Sell trade on the same assets with a wide spread, waiting for it to get tighter, and earning on it.

Th e concept of “spread” is essential in financial markets, especially Forex. Without spread, most Forex brokers wouldn’t be able to operate normally.

What is a spread, how do Forex brokers define it, and what spread types are there?

What is spread?

There are two counterparts in financial markets, buyers and sellers.

Buyers want to buy an asset at the lowest price possible. Sellers, on the contrary, want to sell an asset at the highest price. These two sides create a buying price called Bid and a selling price called Ask.

Spread is the difference between Bid and Ask prices.

Spread = Ask – Bid.

How is spread defined?

The Forex market has hundreds of restrictions as it is the place for banks and financial institutions. That is why retail traders like you and me cannot get personal access to Forex trading.

However, there is a way — to use the services of Forex brokers.

Brokerages like FBS have an agreement with a liquidity provider that has access to the real Forex market. This company gives FBS a way to operate in a Forex market, providing broker’s clients with real prices of assets.

A liquidity provider gives FBS a price with a spread included, and FBS gives the price to its customers with this spread plus a little extra to cover the costs of the operation.

Every asset has a Bid and Ask price. When you buy an asset, FBS opens your order at an Ask price, and vice versa; when you sell an asset, FBS opens your order at a Bid price.

Every time you open a Buy trade, you must wait for an asset to go higher if you want to profit. More to say, you need to wait for the Bid price to reach the level where you opened an order (Ask price). That happens because your order is opened at an Ask price, which is usually higher than a Bid price.

Therefore, a spread can also be a fee for opening a trade because you “pay” the spread every time you open a trade.

Smaller spreads mean better conditions for traders. FBS has account types with spread starting from -1 point, which is incredibly convenient for all traders. These market-leading trading conditions help traders to perform better without worrying that the spread will shrink their profits.

What spread types does FBS offer?

As an international Forex broker with over 27 million clients, FBS offers spreads to satisfy every trader.

Fixed spread

A fixed spread is not changing and remains on the same level no matter what happens in the market. It is way more convenient for traders, especially in volatile times. So if you want to know your profit in advance, start trading with a Micro account.

Zero spread

A zero spread is a variation of a fixed spread. If you do not want to bother with spread calculations, choose a Zero spread account and pay no spread. However, a commission for the order opening is applied.

For example, if you want to open a XAUUSD trade on a Standard account, your spread will be around 22 points, meaning a 1-lot trade would cost you $22. On a Zero Spread account, you will pay a sum starting from $20 per each lot.

Floating spread

A floating or variable spread is a constantly changing value between Ask and Bid prices. In other words, the spread you pay for purchasing a currency pair fluctuates because of supply, demand, and total trading activity.

FBS offers a floating spread on a Standard account. Let’s say you want to trade EURUSD, the most popular currency pair. On the Standard account, EURUSD has a spread of 3 points and a typical (average) spread of 8 points. A 1-lot trade that has an amount of 100 000 in base currency would cost you only $8 worth of spread. That’s one of the best conditions on the market!

If you want to avoid doing math calculating spreads, try an ECN account with extremely low spreads starting from -1 point. There is a fee for opening a trade, but this account type is one of the most beneficial for traders who open ~1-lot positions because the fee is fixed, and bigger orders mean the exact costs.

What can you do with spreads?

The best thing you can do with your trading is to look for a broker with a low spread, as it is the main gauge of fees you will pay for your trading activity. FBS provides amazing spreads for the most popular trading pairs, making it easy for you to trade without worries.

Sometimes, floating spreads can get very wide due to market fluctuations. Experienced traders can execute a spread trade, opening a Buy and a Sell trade on the same assets with a wide spread, waiting for it to get tighter, and earning on it.

The value of the American Dollar (USD) is slipping after reaching multi-decade highs.

After climbing by 22% between May 2021 and September 2022 against the Euro (EUR), the value of the dollar has just seen quite a significant decline since October against the single currency, as the EUR/USD is up almost 13% since then.

Is this the beginning of a durable downward trend for the USD, or will the currency bounce back?

What about the EUR? Is the single currency able to rise in 2023?

In trying to predict the foreign exchange market in 2023, the regulated CFD broker ActivTrades highlights the importance of taking into account the Federal Reserve’s more dovish or hawkish tone, the conflict in Ukraine, and how Europe will deal with its energy crisis, the re-opening of China, and the general investment climate and sentiment.

Technical analysis of the EUR/USD

Daily EUR/USD chart – Source: Online trading platform from ActivTrades

Currently hovering around 1.0841 at the time of writing, the EUR/USD is trading not far from a level unseen since mid-April 2022. Up almost 2% so far this year, the technical configuration is still positive, with the price being above the positive Ichimoku cloud.

Still, prices might be lacking bullish momentum, as they just broke below the Tenkan line with the RSI moving downwards towards its neutral zone, while the MACD histogram is showing signs of weakness.

What’s sure is that the currency pair is about to experience a busy week, full of economic data (PMI, NFP, CPI, and GDP among others) and central banks’ monetary policy meetings, which are going to trigger higher volatility that scalpers and day traders will definitely exploit with active trading.

So be ready to either avoid trading when important economic data are released or profit from short-term trading opportunities. Also, always remember to follow your money and risk management rules to better protect your trading capital!

Why has the currency pair recently increased? And is it going to last in 2023?

In July 2022, the currency pair flirted with parity. However, in September and October of 2022, the EUR/USD fell below parity for the first time in almost 20 years, as the prospect of a severe economic recession in Europe increased significantly as a result of the ongoing conflict in Ukraine, rising borrowing costs, and persistently high inflation and commodity prices.

At the same time, the American Dollar was seen as a safer asset, which attracted many investors looking to invest in safe-haven assets in such turbulent times. Not to mention that the American Federal Reserve (Fed) decided at the beginning of the year 2022 to stop its ultra-accommodative monetary policy and to accelerate its aggressively tightening cycle with strong and rapid rate hikes, supporting the value of the USD.

In the meantime, the European Central Bank (ECB) was still reluctant to increase interest rates, while the region was facing unprecedented uncertainty and rising prices due to the war in Ukraine and a difficult situation about the energy crisis in the Euro Zone area.

But since October 2022, the EUR/USD pair has been on an upward trend, reflecting a decline in the dollar’s appeal as a safe-haven asset.

Firstly, the EUR rose as the BCE appeared more and more willing to continue raising interest rates towards 2023 to fight inflation than the Fed. FOMC’s members seemed to have indeed delivered more dovish statements towards the end of last year, indicating that the Fed’s interest rate hiking cycle might slow down to be able to analyze the effect it has had on inflation so far.

Then, economic news about many European countries was also perceived as not as negative as previously expected, which supported the feeling that recession might be avoided (or might not be as bad as forecast), also thanks to the slight improvement of the European energy crisis.

Whether or not the EUR/USD is going to keep rising greatly depends on how the Euro Zone will be able to deal with its many challenges, how ​the Fed will decide on its monetary policy in 2023, and how global events might unfold this year.

What to watch out for when trading the EUR/USD currency pair

When trading the forex market, you need to be aware of what makes currencies move up or down, but most importantly, you need to understand the specifics behind each currency to truly understand what can influence the currency pair you’re trading.

Here are a few things you need to keep in mind when trading the EUR/USD:

Economic Data Releases

Keep an eye on key economic indicators from both the European Union and the United States, as they can greatly impact monetary policy decisions. Remember that central banks are one of the most influential actors in the Forex market.

As the ECB and the Fed both have the goal of guaranteeing price stability in their economies, inflation figures (like CPI, PPI, wage growth, and PCE) are particularly important for them and for traders.

In addition to stable prices, the Fed also works towards maximum employment, which means that job reports and other related data are important (like the ADP, the NFP, the unemployment rate, and the JOLTS figures).

Interest Rate Decisions

As we said, central bank decisions on interest rates play a crucial role in determining the direction of an exchange rate, as the rate differential is definitely influencing the demand for a specific currency compared to another one.

Decisions from the ECB and the Fed are therefore closely monitored, as are any changes to their monetary policy, particularly when it comes to interest rate decisions, which can strongly influence the currency pair.

Political Events and Statements

Political events and statements by EU and US leaders, including trade negotiations, geopolitical tensions, and speeches from central bankers can also affect the EUR/USD exchange rate, as these events can cause market uncertainty or provide indications or clues about future monetary policy decisions and impact the demand for each currency.

Market Sentiment and Risk Appetite

Global market sentiment and investor risk appetite also have a significant impact on financial assets, and the EUR/USD is no exception.

If investors are feeling positive and optimistic about the future growth of a country, they are more likely to invest in higher-risk assets and favor the currency that provides the best growth opportunities.

On the other hand, if market sentiment turns negative, investors tend to flock to safe-haven assets, which often leads to a depreciation of the EUR/USD exchange rate, as the USD is considered a safe-haven asset.

Technical Analysis and Chart Patterns

Technical analysis is also an important tool for traders in the EUR/USD market.

Keep an eye on key support and resistance levels, trend lines, and chart patterns to identify potential buying and selling opportunities that might be spotted by technical analysts (even if you’re not using technical analysis yourself), as significant price levels very often trigger a reaction from investors and prices.

For ActivTrades, it’s essential​ to keep in mind that there are other factors that can affect the value of the EUR/USD, such as wars, natural disasters, and other global events.

That’s why it’s crucial to regularly follow the news, as well as to always keep an eye on economic data releases of the week to stay informed of what’s happening, as well as significant economic publications that might increase volatility.

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.

Quite a lot of news broke last week, much of which influenced the value of the Forex pair EUR/CHF, such as the European Central Bank’s (ECB) monetary policy decision, the Credit Suisse saga, as well as worries about the strength of the global financial system.

Rising interest rates around the world have indeed increased borrowing costs, which have led to unprecedented bank collapses and bank runs, as the recent news has shown regarding Silicon Valley Bank, Silvergate, Signature Bank, First Republic Bank in the United States, and Credit Suisse in Switzerland.

And things are far from over this week, with the fate of Credit Suisse currently being discussed, and the Swiss National Bank’s (SNB) monetary policy meeting next Thursday (the 23rd of March).

Credit Suisse rescued by UBS

As major actors of the financial sector are working hard to restore confidence in the Swiss bank and in the sector overall, UBS has said that it requires the Swiss government to provide insurance if it were to buy Credit Suisse, thereby halting the banking crisis.

While the information was first about a buying price of around $6 billion, UBS has agreed to buy Credit Suisse this weekend for $3.25 billion (3 billion CHF), or around 60% less than what the bank was worth at the close of last week.

At the European opening, Credit Suisse’s shares opened down more than 60% at 0.67.

Weekly Credit Suisse chart – Source: Trading platform from ActivTrades 100% online (ActivTrader)

Moreover, 5 central banks have announced yesterday a common action to improve the availability of liquidity through the standing U.S. dollar liquidity swap line arrangements (the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank).

As explained by the “the network of swap lines among these central banks is a set of available standing facilities and serves as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses.”

Will the Swiss National Bank continue increasing its interest rates despite market turmoil and global bank chaos as the ECB did?

Despite the recent distress in the banking industry, the ECB agreed last Thursday to increase its 3 main interest rates by a further 50 basis points (its 6th consecutive rate hike), but its members also explained that they were prepared to provide liquidity to banks if it becomes necessary to do so after recent market turmoil surrounding bank runs, bankruptcy and bailouts of major banks in the United States and Europe.

As inflation in the Eurozone area continues to hover much higher than the 2% level targeted by the ECB (the headline inflation in February reached 8.5%, after 8.6% in January), the European Committee has been sending signals for some weeks that it would be hiking rates again at its meeting in March to combat inflation.

The most important factor seems now to be how the ECB will react to currency turmoil in the banking sector. While the European Central Bank is also data-dependant on making its decisions (especially about how inflation and growth figures evolve), it also has to take into account how markets develop, if the panic surrounding the banking and financial sector will spread and its impact on growth prospects, as the outlook has now become more uncertain. Still, two members of the ECB (Kazimir and Simkus) recently declared that this hike wasn’t likely to be the last one, as inflation is still too high.

Last Friday, the European Central Bank supervisors met to share their views on the current banking sector turmoil and declared that they saw no contagion to banks and financial institutions in the EuroZone.

But the outcome of the current Credit Suisse discussions could perhaps change the situation and influence the SNB not to raise interest rates at a time of such high uncertainty about one of its biggest financial institutions.

The EUR/CHF is close to parity

After losing 1.54% in the first week of March, the EUR/CHF currency pair was up 0.75% last week at 0.98728, mostly due to the ECB’s decision, which had supported the single currency, and worries about Credit Suisse that weighed on the Swiss Franc.

According to the ActivTrades’ market sentiment indicator, traders are mostly bullish on the pair, as 89% of all ActivTrades’ traders are buying the currency pair and 11% only are selling it.

Daily EUR/CHF chart – Source: Trading platform from ActivTrades 100% online (ActivTrader)

The pair will still have to face an eventful week. First, market participants are still in risk-off mode and waiting to see how the quick Credit Suisse deal will potentially impact the banking sector to know if the turmoil in the financial sector will soon be over.

Secondly, many key events and central bank meetings will be held later, with the Fed on Wednesday and the SNB and the Bank of England on Thursday.

So, what do you think the next move for the EUR/CHF will be?