has, on average, seen its worst monthly performance in August, with average returns of around -0.5% since 1971. See what other seasonal patterns could play out in August!
August Forex Seasonality Key Points
- GBP/USD has, on average, seen its worst monthly performance in August, with average returns of around -0.5% since 1971.
- For , the key question will be how serious Japan and the US are about providing ongoing support to the yen, rather than long-term seasonal tendencies.
- A bearish move in , in line with the seasonal track record, could create an 8-month head-and-shoulders topping pattern on the pair with a neckline in the 0.6850 zone
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 – Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
Historically, August has been a mixed month for EUR/USD, with the world’s most widely-traded currency pair sporting an average return of -0.1% over the last 50+ years. In July, EUR/USD spent most of the month consolidating above 1.1360 support before rallying into the close of the month following a less-hawkish-than-hoped FOMC meeting. With the conflict in the Middle East back in play, headlines from that region and relative economic divergences should set the tone 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 worst monthly performance in August, with average returns of around -0.5% since 1971. Like the euro, the British pound bounced against the Greenback last month, navigating the new Prime Minister relatively smoothly. For this month, the key level to watch will be the confluence of the July high and 78.6% Fibonacci retracement of the May-June drop; as long as that level holds, the seasonal tendency hints at the potential for weakness.
Japanese Yen Forex Seasonality – USD/JPY Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
August has historically been a bearish month for USD/JPY, with the pair falling -0.3% on average since the Bretton Woods agreement. USD/JPY spent most of last month grinding higher before suspected intervention, supported by the US, led to a sharp drop over the final two days. For August, the key question will be how serious Japan and the US are about providing ongoing support to the yen. Continued rate checks and verbal intervention would likely be enough to support the bearish seasonal tendency in USD/JPY.
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 traded lower in August, with an average return of -0.6% going back to 1971. Last month, the Aussie edged higher against the world’s reserve currency, taking it back above the psychologically significant 0.7000 level after the aforementioned FOMC meeting. A bearish move in line with the seasonal track record could create an 8-month head-and-shoulders topping pattern on the pair with a neckline in the 0.6850 zone.
Canadian Dollar Forex Seasonality – Chart
Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.
Last but not least, August has been a modestly positive month on average for USD/CAD, with an average historical return of +0.2%. The North American pair ultimately finished last month lower, defying the long-term seasonal tendency.
As we head through August, the 6-year “joint review” of the USMCA will be a key event risk for the pair, with President Trump expressing skepticism toward the trade deal from his first term. Additional uncertainty around the trade relationship between the US and Canada could weigh on both currencies, but the impact on the Canadian Dollar would likely be larger, potentially supporting the pair in line with the longer-term seasonal tendency.
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.