Forex Seasonality – December 2024: Can EUR/USD and AUD/USD Rally?

December Forex Seasonality Key Points

• EUR/USD and AUD/USD are heading into their strongest month, hinting at rally potential.
• Meanwhile, December is the most bearish month of the year for USD/JPY, and it’s carrying bearish short-0term momentum into the month.
• GBP/USD’s historic bullish tendency remains in effect above 1.23-24 support

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 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, December has been the most bullish month for EUR/USD, with the world’s most widely-traded currency pair sporting an average return of 1.23% over the last 50+ years. In November, EUR/USD dropped sharply through to hit a 2-year low in November leaving the pair at/near “oversold” levels across most medium- or longer-term timeframes. For this month, the 50% retracement of the 2022-2023 rally near 1.0400 will be the key level to watch, with a break below it hinting at the potential for more downside despite the bullish seasonal tendency.

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 historically seen bullish price action in December, with average returns of around +0.49% since 1971. The British pound also fell victim to the relentless US dollar strength last month, slipping by nearly -3% to trade around 1.2500 as of writing. As long as it remains above the 2024 lows in the 1.2300-1.2400 zone, the potential for a rally remains intact.

Japanese Yen Forex Seasonality – USD/JPY Chart

Source: TradingView, StoneX. Please note that past performance is not necessarily indicative of future results.

December has historically been a bearish month for USD/JPY, with the pair falling by an average of -0.61% since the Bretton Woods agreement, by far the worst average performance of any single month over the last half century+. The pair flashed higher in early November before fading back later in the month, leaving it near unchanged, albeit with potentially bearish momentum heading into the bearish seasonal period.

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 seen historically strongly bullish returns in December, with an average gain of 0.66% across the month. Last month, AUD/USD edged lower in-line with its seasonal tendency, settling near the middle of its 2024 range. With no obvious near-term technical bias, bulls will be hoping the bullish seasonality drives prices back to the upper-0.6000s heading into the new year.

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, December has been a modestly bearish month for USD/CAD going back to 1971, with an average historical return of -0.02%. The North American pair peeked out to a 4.5-year high in November before reversing back toward 1.40 as of writing, so if we don’t see a new bullish catalyst emerge, a pause or minor pullback would make sense.

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.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX