Trading on seasonal patterns alone is a recipe for ruin but they’re another tool in the forex trading toolbox. The past few months, including April, showed the value of trading seasonals so long as you keep a close eye on the risks. For May, three trends stand out.
#3: Dollarama
May is the best month on the calendar in the last decade for the Dollar Index and the second-best over the past 30-years (after January). So far this year the Dollar Index has matched the seasonal pattern in each month this year.
Dollar Index seasonal heat map
It’s not tough to paint a fundamental picture of dollar strength for May. All it would take is a Spring resurgence in economic data. Alternatively, a harsh round of risk aversion or trouble in Ukraine could cause a flight to dollar safety.
