Best 3 forex pairs to trade as volatility escalates

This is a pivotal week for the financial market as multiple central banks deliver their decisions and as the crisis in Ukraine continues. The US dollar and other safe havens like gold and crude oil have been under pressure as signs of hope about the crisis emerge. Here are the top 3 currency pairs to trade this week.

USD/RUB

The USD/RUB has been in a strong bearish trend this week as the Russian ruble recovers. It is trading at 106.24, which is 35% below the highest point this month. The strength of the currency is mostly because of the progress being made by Russian and Ukrainian negotiators. 

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In a statement, Sergey Lavrov said that the two sides were nearing a deal that will end the ongoing war in the country. If this happens, the possibility of western countries abandoning their sanctions in the near future will increase.

Another catalyst that will move the USD/RUB is the likelihood that the Russian government will default on its dollar bonds today. President Vladimir Putin has said that foreigners will receive their payments in the Russian rouble.

GBP/USD

The GBP/USD pair declined to the lowest level this year as concerns about the strength of the UK economy remained. For one, the UK receives significant inflows from Russia every year. The country is also experiencing substantial inflation.

The pair will be ideal to trade for two main reasons. First, the Federal Reserve will deliver its interest rate decision on Wednesday. This will be an important decision since the bank is expected to deliver its first interest rate hike since 2018. Jerome Powell will also provide a guidance on the number of rate hikes that are expected this year.

The other key driver for the GBP/USD pair will be the upcoming interest rate decision by the Bank of England (BOE). The bank is also expected to deliver its third 0.25% increase. 

USD/JPY

The USD/JPY pair has been in a strong bullish trend in the past few weeks. It rose to a high of 118, which was the highest it has been since January 2016. This increase happened after the relatively weak Japan exports data and signs that the economy is slowing down.

The two key movers for the pair will be the upcoming Fed and Bank of Japan interest rate decision. The BOJ will deliver its decision on Friday and analysts will focus on a change of tone by the Hurohiko Kuroda bank.

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