Forex in December: is Omicron dangerous? Forecast for EURUSD, EURJPY, GBPJPY and CHFJPY as of 30.11.2021

The new variant of COVID-19, which emerged at the end of November, will continue to thrill financial markets in December. If the situation settles down by the middle of the last month of the year, the attention of investors will return to monetary policy. Let’s discuss the forex outlook and make up a trading plan for EURUSD, EURJPY, GBPJPY, and CHFJPY.

Monthly G10 currencies fundamental forecast

Until the fall, statistical analysis with fundamental components was not productive, but it made a splash in NovemberAUDJPY and NZDJPY sales yielded 6.2% and 5.8% profits. Pound short trades against the US dollar and Swiss franc added 2.7% and 2.2% to the total deposit, while the oil correction made it possible to earn 3.3% and 7.4% on USDCAD and USDNOK purchases, respectively. 27.6% without using leverage! An impressive result that makes traders track the forex seasonal factor with interest.

December favorites are usually European currencies. From 1975 to 2020, the Swiss franc and the euro strengthened against the US dollar 29 times out of 46, the Swedish krona 30 times, the pound 26 times, and the Norwegian krone 25 times. The influx of tourists to Europe around Christmas has often been cited as a reason for this impressive dynamic. Indeed, it is very beautiful in Europe during this period of the year. It would seem that the pandemic should have made adjustments both in tourist plans and the seasonal factor in forex. In fact, at the end of the last month of 2020, EURUSD rose by 2.5%, while USDCHF fell by 2.7%.

Rise-fall periods


Source: BoE, LiteFinance calculations.

The US and Canadian dollars and the Japanese yen are among the outsiders in December. Loonie averages and medians are negative. The yen’s situation is similar. JPY’s potential weakness means that Omicron will not be as deadly as expected. The NZD at the top of the rankings confirms this.

Averages and medians

Source: BoE, LiteFinance calculations.

During favorable periods, the euro strengthened against the greenback by an average of 2.8%, the Swiss franc by 3.3%, the Swedish krona by 2.5%, the pound by 2.2%. Closing in the red, the Canadian lost 1.2% of its value and the yen 2.7%.

Price dynamics during rise-fall periods

Source: BoE, LiteFinance calculations.

The key events of December will be meetings of the world’s leading central banks. If Omicron does not spread too quickly, the Fed will announce a faster QE tapering than is currently expected, the ECB will declare the end of the PEPP in March and the APP expansion, and the Bank of England will express the desire to hike an interest rate.

Monthly EURUSD, EURJPY, GBPJPY, and CHFJPY forecast

Faith in a better future allows me to recommend buying EURJPY, GBPJPY, and CHFJPY. A rally of these pairs is possible only if the yield on US Treasury bonds starts to rise again. It depends on the spread of Omicron.

The maximum that EURUSD bulls can count on is a rise to the zone of 1.1425 – 1.145, followed by a rebound from important resistance levels and a return to a downtrend. In my opinion, after a prolonged decline, the pair needs to take a break, which increases the risks of developing a short-term or medium-term consolidation. The bearish trend remains stable, as the divergences in the economic growth of the US and the eurozone, as well as in the monetary policy of the Fed and the ECB, confirm the strength of sellers.


Price chart of EURUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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