The forex market is like any other economical movement connected with the dynamics of society. But how did the market manage in 2021 and what are the predictions for 2022? Read further to get some answers.
The foreign exchange market is the most popular trading market in the world. The market consists of a dizzying amount of around 5 trillion worth of forex transactions daily. This speaks to the fact that the market is huge and loads of money are being transported around the world across borders.
The modern foreign exchange market as we know it today was established in the 1970’s. And since then, it has been growing and continues to do so. In 2021 reportedly the foreign exchange market’s turnover will reach 2.98 billion. The same report revealed the most traded currencies EUR/USD followed by GBP/USD and USD/JPY. These are some of the most traded currencies globally, so in that sense it is not so surprising.
Getting into Forex trading
If you have considered forex trading, 2022 might be the year to begin as the lockdown and the following economic activity has resulted in inflation that might increase even more. The market has hopeful feelings about the value of the dollar as it has performed well in the past year.
When getting into forex trading you should do some research in the field. Begin your trading journey at Fxforex.com and find all the needed information to get started buying currencies. If you want to make profitable trades, you will need to keep updated on the market dynamics and keep an eye on the statements from the central bank.
Covid-19 and inflation
Like most markets and financial dynamics in society, the forex market is focused on Covid-19 and inflation. Read about what to keep in mind when Omicron and inflation is roaming on Cnbc.com. Inflation is an essential factor to the forex trading market as it will affect the central bank and their decisions on interest rates.
Generally, the forex market has always followed inflation closely as it presents clues to whether the interest rates will rise or fall. A rise in the rates of the central bank will most likely make the currency increase its value. Where the fall in rates will cause the currency to decrease in value.
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A glance back in 2021 and a look to 2022
Although inflation is generally important to the forex market and its dynamics, it is especially important currently. Due to the fast re-opening of society and the boost in economic activity and the fact that the supply could not stand the pace, the big economies like the US saw the highest price level of consumer prices in the last 30 years.
The dollar could very well rise in 2022 and it could be a profitable year for forex trading with the major currency pairs. Investing in the US dollar it is wise to keep an eye on the Federal Reserve and their statements. Even though the central bank suggests an increase in the rates in the last part of 2022, a big part of the forex market has a notion that it will rise sooner.
Disclosure: Insider Monkey doesn’t recommend purchase of any securities/currencies. Insider Monkey received compensation to publish this article.
