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How Coronavirus affected the Forex Market


The coronavirus caused by Covid-19 is a global pandemic that has shaken world markets into nearly every developed economy. This article explores how the foreign exchange (forex) markets were impacted by the Coronavirus.

For many people, economic harm can be just as painful and stressful as dealing physical pain.

the impact of covid

We also take a moment to acknowledge the mourning and loss of life this infectious disease has caused.

The Coronavirus has taken a toll not just on jobs, and people’s psychological and physical health, but has caused countless deaths, and has resulted in severe economic harm which has been reflected in the prices of assets in global financial markets.

Global stock market corrections

Since the novel Coronavirus was first announced at the end of last year, the markets that were initially affected were the stock exchanges in China, where the virus was initially discovered in Wuhan.

As the number of reported people infected rose across China and neighboring countries rose, the highly-contagious virus went from being a local epidemic, to a world pandemic, and international markets began to exhibit similar trends.

US bear market and flight to cash

Fast forward to Q1 of 2020, and global equity markets along with commodities and nearly every asset including gold and even bitcoin had taken a steep dive, as investors sought cash at the ultimate safe-haven asset.

Just days after the WHO declared COVID-19 to be a pandemic, and after a brutal week for the major US stock indices, on March 15th the US Fed held its second emergency meeting to cut interest rates to boost growth, in anticipation of the economy slowing due to the Coronavirus pandemic.

the impact of covid on forex

Interest rates cut to boost the slowing global economy

By April 2nd, over 1 million cases were reported globally, and social-distancing measures in many countries have brought many aspects of modern day life to a halt, with people staying home, and going out only for essential tasks.

This action of lowering rates in the US added fuel to foreign exchange (forex) markets which were already volatile due to volatility from other asset classes. Dozens of countries followed suit as their central banks lowered interest rates, in anticipation of a global economic slowdown.

Quantitative easing and stimulus packages

In total, lower rates together with various economic stimulus packages that were announced, will have the effect of printing trillions of US dollars, and will put a massive supply of currency into circulation.

Other countries are also creating similar stimulus and quantitative easing programs, as governments react almost in unison to the pandemic.

The forex markets have since experience significant volatility, even in the major currency pairs which are the most liquid, such as the EUR/USD, which can be seen here below on a yearly chart where the volatility spikes suddenly with massive price swings at the end of Q1 2020:

forex chart eurusd

Forex market volatility throughout march

The same type of swings can be seen in other major currency pairs, compared to the EUR/USD, during the month of March when global equity markets suffered their largest single-day declines in decades. Below is a chart of the USD/JPY pair, from TradingView, using rates from OANDA:

forex chart usdjpy

A similar move can be seen in the USD/CHF pair, which during the month of March also had significant swings, moving several hundred pips in one direction before swiftly reversing, and repeating again to a lesser degree.

forex chart usdchf

Trading in conditions like these can be very stressful and difficult, as traders can get caught in emotional decisions and deviate from a well-thought-out plan.

Using Artificial Intelligence to trade forex during volatile times

This is why Wiseinvest has created automated AI trading and AI forex signals, to help take the guesswork out of the identifying when to buy and sell, even when the markets are the most volatile, such as during the Coronavirus pandemic.

Below is another chart of the GBP/USD, which looks slightly different than the rest of the charts, as the UK took a delayed or different approach to dealing with the Coronavirus, and was one of the last major economies to issue stay-at-home orders to its citizens to help curb the spread of Covid-19.

forex chart gbpusd

Wiseinvest’s suite of over 40 forex trading strategies are controlled by Artificial Intelligence (AI), which was the result of years of research and development.

Wiseinvest AI trading and AI forex signals identifies trading opportunities amidst Coronavirus-related volatility

Adaptability is crucial for an automated trading system, and the use of AI and our ability to incorporate fundamental data into our trading system, separates Wise AI trading system from the many forex strategies out there that are only using technical analysis, and thus are not aware of breaking news events that can drive markets almost immediately.

This makes Wise AI trading forex system versatile and adaptable, which are two features to look for in a trading methodology during volatile markets.

The best way to trade forex

There are two ways to invest with our AI in forex:

1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.

automated trading with ai bot

Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.

With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account and you can monitor the AI trading performance directly on our dashboard.

2. Manually with AI-Signals.

Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5 and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.

There are five unique variables for each AI signal, and each must be copied exactly, in order to match the performance of the signal as close as possible.

Each AI signal alert consists of the following five data points:

  • Symbol (forex pair)
  • Direction (long or short)
  • Position size (number of units or lots)
  • Take profit (price level to exit with maximum gain)
  • Stop loss (price level to exit with maximum loss)

You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a Professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.

When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate or change the leverage in your forex broker account. Learn more about leverage in forex trading clicking here.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. The forex broker Fxcm warns that 69.66% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.