Stock market today: S&P 500 falls as rising Treasury yields blunt tech
September has historically been a bullish month for EUR/USD, though not necessarily GBP/USD.
September Forex Seasonality Key Points
- USD/JPY remains in the midst of a seasonally weak period, though its near-term technical uptrend remains intact for now.
- Monetary policy divergences are likely to play a bigger role in currency performance as we move toward the end of the year.
The beginning of a new month marks a good opportunity to review the seasonal patterns that have influenced the forex market over the 50+ years since the Bretton Woods system was dismantled in 1971, ushering in the modern foreign exchange market.
As always, these seasonal tendencies are just historical averages, and any individual month or year may vary from the historic average, so it’s important to complement these seasonal leans with alternative forms of analysis to create a long-term successful trading strategy. In other words, past performance is not necessarily indicative of future results.
Euro Forex Seasonality – EUR/USD Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
Historically, September has been a bullish month for EUR/USD, with the world’s most widely-traded currency pair sporting an average return of +0.63% over the last 50+ years, its second-best month over that sample. In August, EUR/USD bucked its neutral seasonal trend, rising over +2% to reverse most of its July losses. With uncertainty around monetary policy on both sides of the Atlantic as well as political turmoil in France, EUR/USD volatility could remain elevated this month.
British Pound Forex Seasonality – GBP/USD Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
Looking at the above chart, GBP/USD has, on average, seen its second-worst month of the year in September, with average returns of around -0.37% since 1971. Like the euro, the British pound traded sharply higher in August amidst broad-based US dollar weakness. If we do see cable follow its bearish historic tendency this month, the next level of support to watch will be the 5-month low at the 38.2% Fibonacci retracement near 1.3150.
Japanese Yen Forex Seasonality – USD/JPY Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
September has historically been a modestly bearish month for USD/JPY, with the pair falling by an average of -0.17% since the Bretton Woods agreement. USD/JPY fell in-line with its bearish seasonal trend last month but remains above the bullish trend line off its April lows for now. The key support level to watch this month will be at the convergence of that trend line, the 100-day MA, and 2-month low just below 146.00.
Australian Dollar Forex Seasonality – AUD/USD Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
Turning our attention Down Under, AUD/USD has historically seen bearish performance in September, with an average drop of -0.32% going back to 1971. Last month, the Aussie gained ground against the greenback (as essentially every currency pair did). Moving forward, remains rangebound between support near 0.6400 and resistance up near the 10-month high in the 0.6600 area.
Canadian Dollar Forex Seasonality – USD/CAD Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
Last but not least, September has been an essentially neutral month for USD/CAD, with an average historical return of +0.05%. Stop me if you’ve heard this one before, but the US dollar ticked lower against its Northern rival last month, but remains solidly in the middle of its Q2-3 range between 1.36 and 1.40, leaving a neutral medium-term technical bias unless/until we see a breakout.
As always, we want to close this article by reminding readers that seasonal tendencies are not gospel – even if they’ve tracked relatively closely so far this year – so it’s important to complement this analysis with an examination of the current fundamental and technical backdrops for the major currency pairs.