So what can we expect for the next three months?
Once again, I’ve done a little research of my own and checked out what the world’s biggest banks are predicting for the second quarter of 2012:
Meanwhile, the dollar is projected to make solid comebacks against the pound, euro, and Swiss franc.
Doing some simple math, this means that the “experts” feel that those three currencies are overvalued by 2.56%, 4.14%, and 5.17% respectively.
This is quite interesting, as Ben Bernanke recently expressed some concerns about the state of the U.S. economy. His dovish statements were seen as a sign that the Fed may be leaning towards introducing another round of quantitative easing.
Now, before you hop on your trading platform and enter trades based on these forecasts, always remember that NOTHING is set in stone. In fact, bankers as a whole missed badly on their Q1 forecasts!
The median 1st quarter forecasts for NZD/USD and EUR/USD were .7700 and 1.2700, which is way below the current price of around .8200 and 1.3300.
This just goes to show that anything can happen in the markets and even some of the smartest people in the world can be wrong.
Instead, I suggest you use these predictions to aid you in your own analysis. How did these bankers get to these predictions? Do they think that the U.S. economy will improve? Or do they think that risk aversion will take over? What market theme will dominate the forex market?
These are the types of questions that traders should ask themselves before putting on a trade!