Forex Traders Should Brace for Volatility in 2024 – Here is What Investors Should Expect in The Following Months

Ask any investor to describe the forex market in the last years using a word, and they’ll most likely use the term volatility. Great industry jitters, price swings, and market developments will define the Forex trends in the following year. 

Worldwide economies struggle to adjust to the fast-changing environment and the pandemic’s effects. At this point, sentiment over financial markets is shifting from negative to positive and vice versa in a short period.

However, investing specialists have already identified some trends in the movements of primary currencies like the euro and the US dollar. Based on the events unfolding over the next months, these predictions might be invalidated or reinforced. 

Let’s have a look at the opportunities and trends expected to impact the Forex market in 2024. 

The dollar remains the king of the Forex market

Surprisingly, 2021 was an exceptional year for the US dollar because it eluded all gloomy predictions and gained 10% against the Japanese yen. The resurgence of inflation greatly impacted its evolution, and several banks stopped.

Experts predict that this trend will continue in 2024, and the American dollar will continue to perform well on global markets even if global growth steadies and inflation is volatile. Political events will most likely impact the US dollar’s evolution as the US midterms and the French presidential election are close. 

It’s surprising how quickly narratives alter. In 2021, Forex specialists thought that major central banks were far from normalization as the global economy was still trying to recover from the economic effects of the pandemic. The prevailing opinion was that the American dollar would crumble under the pressure of a fading secure demand.

But this presumption fell apart with the spike in inflation. The US dollar obliterated its competitors because the investors priced in multiple rate increases by the Fed to tame inflationary pressures, causing the dollar to fire up.

Forex experts think that the relative monetary policy remains a dominant trend for market performance in 2024. Therefore, the American dollar will stay on the throne of the Forex market and maintain its status as the king of the industry.

At the moment, the US economy registers a roaring growth due to the growing inflation and the several measures the government took to enable the markets to rise with a booming force.

However, there’s the prospect of global hitting the brakes because the government is no longer spending at a fast pace. 

A rise in the popularity of trading apps

Considering that people were forced to spend their time locked in their houses over the last few years, it’s no surprise that they turned to their internet-connected devices to spend their free time and entertain themselves. Some discovered a passion for trading currencies and decided to turn it into a side gig or even a full-time career.

The rise of trading apps aided because it provided them with quick access to all the tools required to complete their transactions. Trading apps have opened the door for beginner traders to enter the market and boost their gains. All they need is a mobile device and a steady internet connection, and they can access an unlimited amount of information. If the Forex trading market was accessible only to white-collar investors in the past, now everyone can place trades.

The Forex market evolved in becoming more accessible to the broad public due to the emergence of trading apps and other technologies that equip investors with knowledge and tools to make a profit. With the increasing availability of apps, forex trading is easier to get into than ever. 

Besides getting people into the market, apps are also designed to educate the public and allow amateurs to learn what signals they should look for and how to read graphs and charts. 

Euro is on a rollercoaster

The Euro had a bad, not to say terrible, year. It wasn’t as lucky as the American dollar and suffered the effects of a central bank that lagged behind the tightening system and a weak economy.

Pandemic restrictions remained or returned in several European countries, crippling economic growth. In such a context, investors lacked the appetite for massive spending.

However, those engaged in Forex trading placed their trades with a broker with high trading leverage to maximize their winning chances. 

The European economy registered no wage growth, and organic inflationary pressures were lacking. Experts predict that the European Central Bank will continue to purchase assets in the following months and keep rates steady.

The market will most likely register a minor increase in December.  

The pandemic will continue to affect major currencies

The coronavirus pandemic affected the foreign exchange market (as it did with all industries). It’s common knowledge that major events impact the Forex sector, and the pandemic was maybe the most significant event in the last few years.

Its effects are likely to continue into 2024 because of the occurrence of new variants of the virus and the necessity to impose new restrictions. This translates into increased volatility in the Forex market. 

Even if some currencies (see the US dollar) are faring better than others, the pandemic still affects all of them. 

USD – even if it had a turbulent period and reached 89,41 in January 2021, it recovered towards the end of the year when it registered 96.95. The outlook for this year is brighter, and investors expect it to have a close value of 97.33. 

AUD – has been dramatically affected over the last two years. If it reached the top value of 0.7996 in February against the US dollar, it dropped to 0.6994 in November. 

GBP – the last two years were far from easy with the effects of Brexit and the pandemic. And with the emergence of the Omicron variant, it reached a 1.32 value in November 2021. 

EURO – registered a high of 1.234 against the USD in January, and it further dropped due to Omicron to 1.120 in November. The predictions show that it will most likely reach 1.11 in 2024.