11 Forex Predictions for 2011

23

Exciting 2010 is behind us, and it’s time to discuss what can happen in 2011. Here are the expectations for currency movements and also for trends in forex trading.

It’s very hard to make predictions for a full year, because so much can happen, but there are some trends that can continue or fade away. Let’s start:

  1. European debt crisis intensifies: High bond yields and the vast amount of money that troubled countries have to pay back in 2011 make another round or two of trouble inevitable. This debt is a heavy burden on the Euro. Printing money isn’t a likely magic solution to the crisis, as inflation can rise. Perhaps if troubled countries left the Euro, this could boost the currency, but this scenario isn’t likely. Spain will be the key country at the beginning of the year.
  2. US Economy improves: We’re already seeing positive signs from the US. With the Fed determined to support growth and not fear inflation, the US will grow, with inflation, rate hikes and a stronger dollar.
  3. Austerity will hurt the pound: Many of the austerity measures will come into effect in 2011, and will take their toll on employment. This in turn will curb inflation and not push for a rate hike. The pound will continue downhill.
  4. Yen will be frustrating: The Japanese yen might lose some ground, but the way will be choppy and frustrating for traders. There are two many forces moving the yen, and in too many cases, important events aren’t moving it at all.
  5. The Swiss franc will lose hot air: The Swiss franc reached new highs at the end of 2010, in safe haven flows. The strong currency will hurt the country’s economy and even without interventions from the SNB, it will retreat.
  6. Commodities will continue rising: It’s not only oil and gold, but also wheat and soybeans. People need food. This will have a significant impact on currencies as well, with exporting countries doing better than importing ones, and food inflation becoming more influential on economic policy and therefore on currencies.
  7. Loonie will make progress: After a choppy year, the Canadian dollar is likely to enjoy stronger oil prices, and much more importantly, a stronger US economy. It has room for some gains.
  8. Aussie will continue being attractive: Even with a slowdown in China, Australia will still enjoy a high interest rate, a sound economy and low unemployment. It may not beat the US dollar, but the it’s likely to leave European currencies behind. The Aussie will also become more attractive for traders – it’s volume already passed the volume of the Swiss franc, and it’s popularity will continue rising.
  9. Forex investment will gain traction: Forex social networks that allow automatically following other traders will undergo upgrades, and new networks will appear, making investment in forex traders popular, opening forex to many regular investors that stayed away from forex up to now.
  10. Less people will suffer forex scams: Maybe I’m being optimistic, but as the forex industry is growing up, with more regulation, it will harder for scammers to fool people, that are more aware of them, and know better how to avoid scams. They’ won’t give up on trying though.
  11. Your predictions!: I’d be glad to hear your what you think will happen in the world of forex during 2011. Anything goes: currency predictions, industry predictions, white swans, black swans, etc.

Have a great 2011!

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

23 Comments

  1. Pingback: EUR/USD Collapses On Huge Job Gain | Forex Crunch

  2. Aunque no se bien ingles, creo que una prediccion que hace falta es que forex crunch va a crecer en seguidores, porque tiene buenos analisis, es completa y organizada. Esta es la mejor pagina que conozco. Gracias Yohay por la dedicacion que le pones, he aprendido mucho gracias a Forex Chunch. Exitos.

  3. Perfect predictions…but we have to wait n watch for the RESULTS…till then these all are said…UNCERTAIN..But hope for the BEST in 2011.

  4. Thanks for all your comments. Gracias! Of course, these are general predictions, and anything can happen… just my thoughts…

  5. Hi Yohay,

    Thank you for the thoughts. Out of curiosity, any prediction on the kiwi dollar, particularly vs the us dollar?

  6. This year will definitely be interesting. The US dollar is at a cross-roads. The Euro is also at a cross-roads.
    With so much debt and the US economy not doing all that great. And over in Europe smaller debt problems and other issues with the smaller economies.
    It’s hard to imagine the dollar losing it’s status as the world’s reserve currency, because there’s no replacement at this point. The EUR was a good candidate but that’s very unlikely at least for the next few years. Other than Europe no other currency could absorb the world’s currency needs at this point.
    I think in 2011 this will be very key, we will see the US $ and Euro get tested.
    I think the US $ will win. So my prediction is EUR/USD lower.

  7. Pingback: Forex Articles for the Weekend January 8 | Forex Crunch

  8. charles booth on

    I like your predictions and thought commentary. trading what you see on the chart not what what you think is still the best prediction

  9. I think based on my stochastic on close/close on weekly chart on EUR Zone, I think Eur will not continue to fall as we think because anything can happen, I am seeing a a quick recorvey on Eur zone next week. So we better watch out for that.

  10. Sir, could you also predict EUR/JPY direction. Will it go up or continue to bearish in this week?

  11. Thank you both. I believe that EUR/JPY will fall as well, although a possible recovery in Europe, as suggested here, might change the direction. In general, I see the dollar strengthening across the board.

  12. One more prediction from me, i’m sure everyone will like that one 🙂
    Retail traders will be more profitable than ever in 2011!

  13. Pingback: USD/JPY Outlook – January 17-21 | Forex Crunch

  14. I am doing a project for school where we are given $100,000 and we have to invest it in anything we choose to, it is all fake money of course, but i was interested in looking into foreign currency. We have nine weeks starting this monday 01/24/11, and i was wondering if this would be a good idea or not, and was wondering what the best currency, in your opinion, to invest in. Thank you

  15. what will be the future of CHF/USD and Aussie$/USD?.
    Plz comments n oblige me.