Forecast for Forex and Cryptocurrency in 2022 by NordFX

The world economy is recuperating from the COVID-19 epidemic, and this will continue in 2022. At the very least. This year, the global GDP growth prediction of 6% is maintained. According to early projections, growth will remain at about 5% next year (barring any fresh “surprises”). However, this is an average measure, and the variance in the rates of recovery of various nations' economies would impact the rates of their respective national currencies.

Since the beginning of the epidemic, the EUR/USD pair has had quite a distinct vector behavior. The pair began at 1.0635 in March 2020 and was already at 1.2350 in early January 2021. The dollar's depreciation has been exacerbated by the US Federal Reserve's aggressive pumping of large amounts of money into the US economy as part of its monetary stimulus (QE) strategy.

With the start of a new 2021 and the coming of a new President Joe Biden in the White House, the market has a sense of better stability and the impending end of QE. This is especially true given the positive macroeconomic data, notably inflation and labor market improvement. The dollar strengthened, and the EUR/USD pair fell to 1.1700 at the end of March.

However, a dovish mood prevailed among the Fed's leadership, and the Fed continued to pump money into the economy, the start of the quantitative easing program's curtailment was postponed indefinitely, and hiking the base interest rate was out of the question. And the pair climbed beyond the crucial psychological threshold of 1.2000 once again, hitting a high of 1.2265.

The rivalry between Europe's and the United States' central banks did not stop there. While the ECB's tone remained dovish, certain Fed officials' words already sounded harshly aggressive. Investors began to anticipate that the Fed would begin to taper QE at the end of this year and finish it in 2022, with the discount rate beginning to rise in early 2023. And the dollar gained momentum once again, sending the pair back into the 1.1700 range.

The American regulator did not reveal any precise intentions for reducing the monetary stimulus program during its September meeting. However, assuming decision-making dynamics continue unchanged, the Fed will be six months ahead of the ECB.

On this premise, many analysts believe that the dollar would rise further in late 2021 and the first part of 2022. In this event, the pair will continue to fall, first to the 1.1500 support level and subsequently to 1.1200. Some fervent bears anticipate the pair may even fall to March 2020 lows.

According to numerous projections, the US economy would stabilize in the second half of 2022, while the “slow” Eurozone will begin to gather speed. A slowdown in the European QE program and an increase in the euro interest rate might revert the pair to the 1.1700-1.2000 range.

The dynamics of the pair are influenced by a variety of circumstances on both sides of the Atlantic Ocean, including political, economic, and, in recent years, epidemiological issues. Another big actor in China has a significant impact on the economics of both the Old and New Worlds. As a result, it should be recognized that everything expressed is based on a current picture of the situation and is susceptible to (and should be) revision several times over the following months.

Virtual and Real Gold Cryptocurrencies

While there is a general understanding and political and economic reason for projections with the primary currency pair EUR/USD, things seem to be considerably more convoluted when it comes to bitcoin. Despite the claims of influencers, this market seems to have been more of a hotbed of mass speculation during the last 1-1.5 years than a dependable investing platform. Although the year is not yet done, bitcoin has already risen from $28,550 in January to $64,800 in April, then crashed to $29,300 in July, just to repeat the surgeon on a lesser scale.

The BTC/USD pair's price may be impacted not only by choices made by US authorities and the Chinese government but even by Elon Musk's attitude when he wakes up. His tweets have the power to make you a fortune or to rend you to shreds. That is why NordFX brokerage enables its customers to profit not only from the rise but also from the collapse of cryptocurrency values, even if they do not own a single token. Why incur the risk of purchasing bitcoin and then selling it？ After all, you may immediately initiate a sell trade.

Nobody knows what the reference cryptocurrency will cost. Experts' perspectives differ greatly. Some, such as Standard Chartered, estimate a $100,000 increase by the end of this year, while others forecast a $100,000 increase by the end of 2022. And others, such as Nobel laureate Robert Schiller, believe that the bubble will collapse soon, burying the two trillion USD or more that investors have put in this market.

Much will depend on the recovery of the US economy, the pace of the winding down the monetary stimulus (QE) program, the prospects for the Fed raising interest rates, and the dynamics of treasury yields. These are the kind of circumstances that might significantly lower institutional investors' risk appetite and cause them to revert to more familiar financial products.

The estimate of Standard Chartered specialists for Ethereum is as positive as it is for bitcoin and seems to be highly enthusiastic. In an interview with Reuters, a price range of $26,000-35,000 per coin was stated. But that's not the limit either, especially if the bitcoin rate approaches $175,000 by the end of 2022.

According to a report by the major investment bank Goldman Sachs published in Forbes, the base cryptocurrency has the chance to lose its leading position, giving way to Ethereum. Goldman Sachs believes that the main reason for the popularity of the main altcoin is the ability to create new applications. And also the fact that many financial instruments can be replaced based on their platform. This includes, among other things, loans and other banking operations.

As for real, not digital, gold, several experts believe that this precious metal has yet to run out of growth potential in 2022. They do not rule out that the XAU/USD pair could break the August 2020 record and rise to $2,200-2,300 per ounce. However, the price performance of this reserve asset will also depend on investors' willingness or reluctance to take risks, as mentioned above.

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