End-of-Year Tendencies for the Major Currency Pairs

With only a couple of weeks left this year, some investors are starting to round up their trades and reduce their risk. However, there are also trading junkies out there who aren’t planning on closing up shop until they absolutely have to.

If you’re one of those who are still planning to trade over the next couple of weeks, here’s a chart of the major currency pairs’ December movement (in pips) over the past 10 years!

Pair Tendencies

Some observations:

1. GBP/USD tends to weaken in December

One look at the chart above shows us that unlike in the summer months, the major currency pairs don’t usually favor a direction in December. Well, maybe except for GBP/USD. Cable has capped the month in the red 8 out of 10 times in the past decade. Just something to think about for those who are planning on doubling up on their Cable longs.

2. Aside from 2008 and 2010, the comdolls don’t usually move around a lot

Unless George Soros decides to close his billion-dollar AUD short or China comes up with more surprises for the markets, we probably won’t see any significant price action from the comdolls. For the past two years AUD/USD, USD/CAD, and NZD/USD ended the month less than 100 pips below or above their open prices, a significant contrast against the more common pairs like EUR/USD, GBP/USD, and USD/CHF.

3. The USD Index, USD/CHF and EUR/USD are correlated

If your usual pairs aren’t showing as much volatility as you usually see, then you can take advantage of correlated price action. For example, the dollar index has consistently closed in the SAME direction as USD/CHF while EUR/USD’s performance has also been consistently moving in the OPPOSITE direction of USD/CHF.

There you have it, folks! As usual, I’d like to remind you that the chart above only shows history and tendencies. They’re not in any way an indication of what could happen over the next couple of weeks. If you’re set on trading these probabilities though, then make sure that you consider as many scenarios as you can to limit your losses!