Forex Market Forecast for January 2024

Nick Ranga

Forex Market Forecast for January 2024

We are a little late with this article, but even after one day of trading in 2024, it’s easy to see how unpredictable the market can be. Geopolitical concerns have started to rise again over the past few days, with an escalation in tensions, resulting in the safe haven US dollar making strong gains on the first day of the month. As we said in our previous forecast, sentiment can turn in an instant. Here are some key points to consider for January:

  • Again, assess how geopolitical tensions will impact the markets you are trading. The escalation over the last few weeks may see a more decisive risk-off move than initially expected this month.
  • Earnings season. As we head into earnings season, how the big stock names perform could impact sentiment in other asset classes.
  • Interest rate expectations. Traders now are pricing in rate cuts this year. Evaluate how this could impact the currencies you are trading.

US Dollar

Now, if we had written this a week ago, our view may have been entirely different. However, the opening trading day of 2024 means we are slightly more cautious than previously expected. While we expect to see risk on currencies climb against havens such as the US dollar this month, the increase in geopolitical tensions means that the climb may come later than expected. We will continue to assess the news over the next week, as you should also, but for now, we are sticking with our expectation of the USD being slightly weaker at the end of January.

Key Levels

  • EURUSD: Higher – 1.1141, Lower – 1.0770
  • GBPUSD: Higher -1.2960, Lower – 1.2440
  • USDJPY: Higher – 145.00, Lower – 138.80

Euro

The euro climbed to a high of over 1.11 against the US dollar, while the EURGBP, as predicted, fell below the 0.8610 mark early in December. Looking to January, given the pricing in of US rate cuts, we see the euro rising against the dollar. Our view, as explained earlier, is based on the belief that macroeconomic and geopolitical tensions will continue to ease over the course of the month. The pair is still in an uptrend on the daily chart, but the momentum is currently taking it lower. Given the uncertainties, it is crucial to be prepared to change your market view quickly this month.

Key Levels

  • EURUSD: Higher – 1.1141, Lower – 1.0770
  • EURGBP: Higher – 0.8755, Lower – 0.8550

British Pound

The GBPUSD rallied to over 128 in December, but that rise has halted over the last few sessions, with the pair now trading just above 1.26. The pound hasn’t been helped by the negative outlook on the rising economy, and there have been some calls for the BoE to lower rates. Nevertheless, we eventually see the GBPUSD climbing back toward the 1.28 level this month (again, only if geopolitical tensions ease).

Key Levels

  • EURGBP: Higher – 0.8765, Lower – 0.8610
  • GBPUSD: Higher -1.2750, Lower – 1.2400

Japanese Yen

November and December were great months for yen bulls, with the USDJPY dropping to as low as 140.25. Signals of a policy shift by the BoJ had fueled the rally in the JPY. However, a couple of weeks ago, it maintained its current policy, resulting in a pullback. Looking ahead, there are mixed signs. The strong downtrend in the USDJPY suggests the current pullback may not continue, but the macros suggest investors may be looking for the US dollar as a safe haven (the yen has lost its safe haven feeling of late).

Key Levels

  • USDJPY: Higher – 145.00, Lower – 138.80
  • EURJPY: Higher – 159.30, Lower – 151.54

People Also Read:


 

Trade EURUSD with our top brokers

Broker Features Regulator Platforms Next Step
Number One Broker tickmill_logo-174% of retail CFD accounts lose money Founded: 2014
74% of retail C...
  • Well regulated
  • Ultra-fast and high leverage trading
  • Spreads as low as 0.0 pips
  • Comprehensive research tools
  • Relatively limited number of markets
  • Does not accept US traders
FSA SC MT4, MT5
Blackbull LogoYour capital is at risk Founded: 2014
  • User-friendly platform with great trade-analysis tools
  • Leverage Up To 1:500
  • Spreads as low as 0.00 pips
  • Quality trade execution thanks to high-spec IT infrastructure
  • $0 minimum account opening balance
  • 26,000 tradeable instruments
  • Not available in all jurisdictions
  • Regulatory infrastructure
FSPR MT4
Your capital is at risk Founded: 2006
Europe* CFDs ar...
  • Multi-asset broker offering a wide variety of markets
  • Strong regulatory framework
  • Innovative risk management tools
  • Choice of market-leading platforms
  • Wide spreads on some markets
  • Expiry date on Demo Accounts
ASIC, FSA, FSB, MiFID MetaTrader4, Sirix, AvaOptions, AvaTrader, Mirror Trader
Between 74-89% of CFD traders lose Founded: 2010
Between 74-89 % of retail investor accounts lose money when trading CFDs
  • Low trading costs
  • Great market flow
  • Research and analysis which helps spot trades
  • Wide range of Copy and Social Trading options
  • Limited range of non-forex markets
ASIC, FCA MetaTrader 4, MetaTrader 5, cTrader
eToro Logo77% of CFD traders lose Founded: 2007
77 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
  • Social and Copy Trading Platform
  • Beginner Friendly
  • Risk-free Demo Account
  • Top-tier regulation
  • Limited means of raising queries
  • Withdrawal process isn’t really ‘client-focused’
ASIC, CySEC, FCA eToro Platform
XM LogoYour capital is at risk Founded: 2009, 2015, 2017
  • Low minimum deposit
  • Super- tight bid-offer spreads
  • Impressive trading platforms
  • Tier-1 regulators
  • Difficult to contact tech support
  • No Crypto
ASIC, CySEC, IFSC MT4 Terminal, MT4 for Mac, Web Trader, iPhone/iPad Trader, Droid Trader, Mobile Trader, MT5
FxPro LogoYour capital is at risk Founded: 2006
  • Very well regulated
  • Comprehensive education section
  • Fantastic customer service
  • No cryptocurrencies
  • Fees could be more competetive
CySEC, DFSA, FCA, FSB, SIA MetaTrader4, MetaTrader5, cTrader, FxPro Edge (Beta)

    Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.

    Nick Ranga
    Forex.com logo74% of clients lose money. Capital at risk.

    - Trusted Global Market Leader
    - Online FX & CFD Trading
    - 180+  Global Markets, 84 FX pairs, 65 shares, 17 popular indices and more
    - Forex, Indices, Commodities, Equities & Bitcoin
    - Available to US traders

    Oanda Logo77% of retail CFD accounts lose money Your capital is...
    • Choose from four high-quality platforms.
    • Good trading conditions with fast execution speeds
    • Excellent research and analysis
    • Strong client protection
    • Winner of Most Popular Broker award for three consecutive years.
    • Fees and commissions are inline rather than market-leading.
    • Satisfactory rather than impressive range of instruments.
    eToro LogoYour capital is at risk

    - Trade 15 cryptocurrencies
    - Beginner friendly