Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

What is the outlook for forex in 2020?

2019 has seen the greenback triumphant against most other major currencies. While GBP/USD could be at a turning point, there are risks of further downside for EUR/USD, AUD/USD and USD/CAD.

Trader Source: Bloomberg

EUR/USD

EUR/USD has spent the past two years steadily declining. ‘Sell the rallies’ has been the phrase, and with the price having bounced from the September low and returned to the 50-week simple moving average (SMA) of $1.119, some will be expecting further declines.

A reversal below $1.11 would provide that indication, and would open the way to $1.09, possibly the last stop below a fall to the 2016 lows at $1.0532. A close above $1.12 would be a signal for a potential breakout, targeting $1.14 and then $1.1554.

EUR/USD weekly chart Source: ProRealTime
EUR/USD weekly chart Source: ProRealTime

GBP/USD

It has been a five-year downtrend for GBP/USD, but we could be at an interesting turning point.

The second week of December 2019 saw the price close above the 200-week SMA ($1.3039), but if the price closes back below this then more downside may result. A possible target would be $1.20, the key low of 2016 and 2019. A rally back above $1.35 would reinforce the perception of a trendline break.

GBP/USD weekly chart Source: ProRealTime
GBP/USD weekly chart Source: ProRealTime

EUR/GBP

The key characteristic of EUR/GBP has been the three-year resistance around £0.93. Rallies to this level since early 2016 have run out of steam.

The late-2019 decline carried the price through trendline support from the November 2015 low, but once again a dip to £0.83 has found support. Further gains target £0.90 and then £0.93. A weekly close below £0.83 would mark a significant shift, and might signal the start of a bigger pullback, although we will need to see the creation of lower highs and lower lows to provide confirmation.

EUR/GBP weekly chart Source: ProRealTime
EUR/GBP weekly chart Source: ProRealTime

USD/JPY

Lower highs have been in fashion for USD/JPY since the first half (H1) of 2015. While the pair has bounced from the low of the year at ¥105.00, a key level of support since 2018, the rally could be running out of steam.

A long-term descending triangle is in place, which would suggest any fresh decline will challenge ¥105.00 again and then potentially open the way to ¥100.00. A rally above ¥110.00 is needed to break higher, to target ¥112.40 and then ¥113.60.

USD/JPY weekly chart Source: ProRealTime
USD/JPY weekly chart Source: ProRealTime

AUD/USD

AUD/USD has declined in 2018 and 2019. Gains this year have been capped by the 50-week SMA (currently $0.6952), but the fall has slowed in pace as it approaches support at $0.668.

A move below this brings $0.6248 and then $0.6008, lows not seen since 2009, into play. A longer-term bullish view requires a move back above the 50-week SMA and the creation of a higher low.

AUD/USD weekly chart Source: ProRealTime
AUD/USD weekly chart Source: ProRealTime

USD/CAD

Having rallied steadily since 2017 H2, USD/CAD has lost momentum over the past 12 months.

Lower highs have been in place since December last year, and while the pair has held above C$1.30, another test of this level seems likely. Below this, C$1.28 and C$1.26 come into view, while a more bullish view on this time frame requires a move above C$1.334, a zone of resistance that has held since July, along with trendline resistance from the December 2018 high.

USD/CAD weekly chart Source: ProRealTime
USD/CAD weekly chart Source: ProRealTime

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.