Which currency pairs will be most attractive in the second half of 2023?

Forex markets have many opportunities in 2023. Last year was positive for the markets in general, as they witnessed a recovery from the aftermath of the pandemic. This year, however, it turns out that central banks, as well as investors, are facing another challenge: inflation. Energy and food prices are growing steadily, which could cause an economic slowdown. Under these circumstances, it might be wise to check the best trades during this year.

Below we will explore the major forex trading opportunities in 2023. Most of the suggested pairs have long-term rather than short-term opportunities. Thus, you need to ensure that your strategy is suitable before taking any of those trades.

1. The Australian dollar against the American dollar, AUD/USD. Commodities are facing a slowdown. They typically do so in a rising interest rate environment. The Australian dollar is usually affected by commodity prices as well as risk sentiment, and both factors are pointing downwards. Fears of a recession are triggering a selloff in equities, revealing the risk-off sentiment. On the other side of the trade, the US dollar seems to be strong as the Fed is on a monetary tightening path and might be hiking interest rates even further. This sets the stage for a decline in AUDUSD. The technical signals confirm this as there is a break out of the horizontal support level.
2. Euro against the Canadian dollar, EUR/CAD. Even though oil prices have spiked, they are currently showing signs that the upward momentum has weakened. This represents a bearish signal for the Canadian dollar, which has a relative correlation with oil prices (given that Canada is an oil-exporting country). On the other side of the trade, the Euro seems to be in a better place despite the challenges. A hawkish European Central Bank (ECB) means the Euro can strengthen from here. The technical signals on the weekly chart show that the pair might have reached a bottom. After a downtrend, the pair is consolidating, and it seems to be ready for a reversal to the upside.
3. The Sterling Pound against the Canadian Dollar, GBP/CAD. After a long downtrend in the sterling against the Canadian dollar (due in part to the strength of the Canadian dollar), it seems that the trend is weakening. The bank of England is also like other central banks on a tightening path, and as a result, the pound might be strengthening soon. Technically, the pair also seems to have reached a bottom, at least a short or medium-term one, and it is changing direction.

Summary

The AUDUSD, EURCAD, and GBPCAD are showing promising signals and may offer good opportunities. Many other pairs can offer signals in shorter time frames, but you need to be sure about your strategy before trading them. No matter what the pair you choose is, make sure to manage risk well and diversify your holdings when needed.