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Which currency pair is most profitable in forex 2021?

Forex trading has always been a lucrative opportunity for investors to make a profit. It involves buying and selling currency pairs to make a profit from the fluctuations in exchange rates. The currency market is one of the most liquid markets in the world, with daily trading volumes exceeding $5 trillion. However, not all currency pairs are created equal, and some are more profitable than others. In this article, we will explore which currency pair is the most profitable in forex 2021.

Before delving into the most profitable currency pair, it is essential to understand the factors that affect currency pairs’ performance. The currency market is influenced by several factors, including economic indicators, geopolitical events, and central bank policies. A strong economy, stable political environment, and positive central bank policies can lead to a currency appreciation, while weak economic indicators, political turmoil, and negative central bank policies can result in currency depreciation.

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Based on these factors, the currency pair that is expected to be the most profitable in 2021 is the USD/CNH (US dollar/Chinese yuan) pair. Here’s why:

1. Strong US economy

The US economy has been performing well in recent years, with the GDP growing at an annual rate of 4.1% in the last quarter of 2020. The country’s economic strength is expected to continue in 2021, thanks to the Biden administration’s stimulus package and the vaccine rollout. A strong economy usually leads to a stronger currency, and the USD/CNH pair is likely to appreciate due to the strength of the US dollar.

2. Chinese economic recovery

The Chinese economy was the first to recover from the pandemic, and it is expected to continue growing in 2021. The country’s GDP is projected to grow at a rate of 8.1% in 2021, driven by strong domestic consumption and infrastructure spending. A recovering Chinese economy is good news for the yuan, and the USD/CNH pair is likely to depreciate due to the strength of the Chinese currency.

3. Geopolitical tensions

The US-China relationship has been strained in recent years, with trade tensions and political disagreements. The Biden administration is expected to continue the tough stance on China, which could lead to further geopolitical tensions between the two countries. Geopolitical tensions can lead to currency fluctuations, and the USD/CNH pair is likely to be affected by any developments in the US-China relationship.

4. Interest rate differentials

Interest rate differentials play a significant role in currency fluctuations. The US Federal Reserve has kept interest rates near zero to support the economy, while the People’s Bank of China has been gradually increasing interest rates to combat inflation. The interest rate differential between the two countries can lead to currency fluctuations, and the USD/CNH pair is likely to be affected by any changes in interest rates.

In conclusion, the USD/CNH currency pair is expected to be the most profitable in forex trading in 2021. The strong US economy, recovering Chinese economy, geopolitical tensions, and interest rate differentials are all factors that are likely to lead to currency fluctuations in this pair. However, it is essential to remember that forex trading is risky, and investors should always do their due diligence before investing in any currency pair.

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