You knew that the world economy is currently unstable due to the global coronavirus pandemic. This pandemic has affected various life aspects in this universe. Those are like tourism, economics, and more. Your social life is also affected and changed because of the pandemic.
That is why; recent Covid-19 disease is also affecting the forex market. How has this pandemic affected the USD price in the forex market? As long as people still feel threatened by the spread of the coronavirus, the USD is expected to continue to strengthen.
It will be affecting the price of currency pairs involving USD, or so-called major pairs. The trend of rising and falling currency pair’s prices is a common thing. It is referred to as bullish and bearish. Find more information about it below.
Currency Pairs at a Glance
In forex, currencies are always traded in pairs. That is why; it is always called the currency pairs. The example is EUR/USD. The EUR is called the base currency and USD is called the quote currency. So, the prices of these two currencies influence each other.
If the EUR rate is strengthening, it will weaken the USD exchange rate against the EUR; and vice versa. Then, what is the relationship between currency pairs and bullish and bearish? The term bullish is taken from the habit of fighting bulls butting the opponent upwards.
Just like in forex, where bullish indicates the price of the base currency that goes up or strengthens. On the other hand, bearishness is taken from the fighting style of a bear which slams its opponent to the ground. This term comes with a sign.
The Condition in Europe Market
In forex, bearish indicates that the base currency price continues to fall or weaken. Since the coronavirus spread in Italy at the end of February, European economic conditions have been quite weak until now. The unemployment rate is predicted to increase further.
The purchasing power of the public as a whole will also decline. It causes the weakening of the EUR against the USD. If you look at the EUR/USD currency pair, the EUR value as the base currency is experiencing a decline.
You can conclude that currently, the EURUSD pair is in a bearish position at the moment. Overall, the USD is still stronger than other major currencies. GBP/USD pair for example. During April and May, GBP continued to decline against the USD, or bearish.
Other major pairs have experienced the same thing. The AUD/USD and NZD/USD are also experiencing a bearish trend. The USD/CAD and USD/JPY is in a different trend. Both of these pairs are in a bullish position because USD strengthens in its quote currency pair.
What You Need to Do
Seeing the recent conditions, you can trade in two directions. It is done by opening a buy position when the price is bullish and a short position when it is bearish. With this strategy, you can still get profit opportunities in any market condition.
Besides that, as a trader, it is important to make an account in a trusted online broker. Your account must be equipped with a margin call feature. Make sure you can set a stop loss. Take advantage of these two features as additional brakes.
Besides that, a professional online broker will also equip you with other beneficial features to support trading activity. Make sure to get the right one. You can ask a recommendation from your trusted friends or get it from an online forum.
It will be beneficial to prevent the risk of loss that is too large. Besides that, don't forget to continue to diversify your portfolio. It means that you need the right strategy to do forex trading. The dynamic condition can happen at any time.
